Bitcoin's Bulls Now Have a Target of $13.2K, Monthly Chart Suggests
Bitcoin now needs to break above $13,200 to revive the stalled bull market, a key monthly chart pattern suggests.
- Bitcoin charted an "inside bar" pattern last month, making $13,200 the level to beat for the bulls.
- A convincing move above $13,200 would imply a resumption of the rally from lows near $4,050 seen in April.
- A break below $9,049 (July's low) would confirm a bearish inside bar reversal on the monthly chart.
- The hourly chart indicates prices could drop below $11,000 in the next 24 hours or so.
- The bearish case would weaken if lower-highs pattern on the hourly chart is invalidated with a move above $11,431.
Bitcoin (BTC) now needs to break above $13,200 to revive the stalled bull market, a key monthly chart pattern suggests.
The top cryptocurrency by market value created an "inside bar" pattern in July, with the monthly high and low of $13,200 and $9,049, respectively, falling within June's trading range of $13,880 to $7,432.
An inside bar candle is characterized by a higher low and a lower high than the previous candle, and represents an indecisive market or consolidation in a narrowing price range.
A convincing break above the inside bar's high is widely considered a sign of a bullish breakout. As such, July's high of $13,200 is now the level to beat for the bulls.
As of writing, BTC is changing hands at $11,220 on Bitstamp, representing little change on a 24-hour basis.
Monthly and weekly charts
BTC broke into a bull market in April and rose to a 17-month high of $13,880 before creating last month's inside bar candle (above left).
Coming after a notable uptrend, the pattern suggests bullish exhaustion and an impending bullish-to-bearish trend change.
That said, a bearish reversal would be confirmed only if BTC ends the current month below July's low of $9,049.
On the other hand, acceptance above $13,200 (July's high) would signal a continuation of the rally from April's low near $4,050.
The probability of BTC ending the current month above $13,200 would rise if prices print a bullish weekly (Sunday, UTC) close above $12,000.
As can be seen (above right), the cryptocurrency has failed four times in the last seven weeks to find acceptance above $12,000. Many observers believe a weekly close above $12,000 would imply a continuation of the bull market.
While the argument has merit, a stronger confirmation would be a high-volume move above $13,200.
As for the next 24 hours, BTC risks falling below $11,000.
Hourly and daily chart
BTC has created a lower high at the lower edge of a flag pattern (above left) in the last 24 hours, reinforcing the bearish view put forward by the flag breakdown – a bearish continuation pattern – confirmed yesterday.
Selling volume is again ticking up, validating the bearish setup, while the relative strength index, too, is reporting bearish conditions with a below-50 print. The 5- and 10-day moving averages (MAs) have produced a bearish crossover.
As a result, prices may well drop toward the 5-week moving average, currently at $10,778.
The bearish case would weaken if prices rise above $11,431, invalidating the bearish lower highs setup. In that case, $12,000 could come into play.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Bitcoin image via shutterstock; charts by Trading View
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