- 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.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.