A debate is raging among bitcoin traders after a chart-reading analyst spotted a pattern known as a “bull flag,” ostensibly portending a coming rally to $70,000 or beyond.

The analysis, posted on the website Bitcoinist by Yashu Gola and affirmed by Bill Noble at Token Metrics, concluded that the bull flag has formed over the past month, and that the cryptocurrency’s price is set to pop after a breakout in recent days. 

But when it comes to identifying and interpreting price-chart patterns there’s an art to the science, and some practitioners of bitcoin technical analysis say they can’t see the flagpole needed to complete the picture. 

“I disagree that there is a flag pattern because there is no real ‘flagpole’ preceding the consolidation phase that has been resolved to the upside,” Katie Stockton, a technical analyst for Fairlead Strategies, told CoinDesk in an email.

The debate has reached such a fever pitch that it was trending Tuesday on the social-media site Reddit:

Bitcoin post trending on Reddit
Source: Reddit

The controversy comes as bitcoin continues to draw all manner of bullish predictions, from all corners of the market, having rallied six-fold since October. While some analysts have modeled out long-term price forecasts of $100,000 or even $1 million based on a range of methods, few traders are currently calling for a rally to $70,000 in the short term. 

According to the original post on Bitcoinist, the cryptocurrency broke out of its bull flag pattern on Tuesday, signaling the end of a two-week-long price consolidation phase and marking a resumption of the broader uptrend. 

Under the theory of chart analysis, also known as technical analysis, a flag breakout signals an asset is likely to move upwards, roughly on the scale of the preceding bull move, which is known as the pole. In this case, the breakout has created an opening for prices to move toward $70,000 or beyond, according to Gola. 

Bill Noble, chief technical analyst at Token Metrics, a cryptocurrency research company, mostly agreed with the Bitcoinist post in an email, saying the pattern does look like a bull flag on the four-hour chart. 

“If you look at the four-hour chart, the bull flag appears as a parallel channel,” he said. “In my mind, this makes the pattern very clear.”

“Simply put, the recent consolidation in BTC is a pause that refreshes,” according to Noble. “Depending on what time frame you use for the measurement, the upside target for BTC could be either $75,000 as per the four-hour chart or $80,000 per the daily chart.”

Bitcoin's 4-hour chart
Source: Bill Noble, Token Metrics

However, some analysts say the pattern does not qualify as a bull flag, and traders are running ahead of themselves in making bold predictions based on it.

The rally seen in the first two weeks of March should have been much steeper or bigger in magnitude to qualify as the flag’s pole, according to Stockton. What appears instead is a pole almost equal to the size of the so-called flag. 

“For it to be a flag, in my opinion, the early-March rally would have been steeper, and new highs would have been registered versus the high point of the consolidation phase,” she said. 

Bitcoin's daily chart shows a flagpole almost as long as the flag.
Source: TradingView

Gola, when asked for his response to the critique, told CoinDesk in a LinkedIn chat that the price structure looks like a bull flag despite the pole not being steep enough.

He said the price projection was supported by news developments this week, including the payment giant Visa’s announcement that it will process transactions on the Ethereum blockchain, along with PayPal’s plan to roll out a cryptocurrency check-out service across some 29 million online merchants. Both were seen as signs of growing mainstream adoption of digital assets, which could be broadly beneficial to the bitcoin market.

“I professed my upside bias based on rising volumes, as the price rose on daily timeframes before entering a consolidation period,” Gola said. “Also, the bull flag works in conjugation with supportive fundamentals, including the latest PayPal and Visa announcement. We need to look at all the sides.”

“Anyway, it is a humble opinion, not an outright claim,” he said.

Even if traders agree that bitcoin’s bull flag has appeared in the price chart, there’s still lingering doubts over whether the breakout is confirmed yet, according to Eddie Tofpik, head of technical analysis and senior markets analyst at London-based ADM Investor Services International Ltd.

“Minimum of two consecutive UTC closes” are required above the flag hurdle before the breakout is confirmed, Tofpik said, and “maybe more, given the nature of the market.” A “UTC close” refers to the price of bitcoin at midnight, Coordinated Universal Time. Since global cryptocurrency markets are always open, many traders use that time as a way of marking the end of one trading day and start of the next.

A price rejection around the March 15 all-time high, just above $61,000, could cause a reversion back down, Tofpik said.

Perhaps not a red flag, but a yellow one at the very least.

Also read: Bitcoin Uptrend Intact After Month-Long Consolidation; All-Time High Within Reach

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