Bitcoin price is at a crossroads, either ready to fall into the troughs of a bear market, or blast off and show the world the bull run has yet to officially end. But which is it? No one truly knows, but a technical pattern and the psychology behind it could reveal the potential outcome ahead of time.
Could a potential bull flag forming on daily timeframes confirm, and lead to what is ultimately the checkered flag of the current market cycle? Let’s examine the bullish chart pattern.What Is A Bull Flag? Bitcoin Price Pattern Targets New All-Time Highs
Technical analysis is the study of chart patterns, sequences, candlesticks, indicators, oscillators and more. The study is used to improve profitability by using statistics to increase probabilities of results. This can vary from finding price targets to sell assets, or finding support and resistance.
A bull flag is a bullish chart pattern and there is potentially one forming on the daily BTCUSD price chart. It is hard to say that Bitcoin price action is bullish right now, considering it was trading at $65,000 only a few months ago, but the pattern fits the shape.
Related Reading | Build Base Or Bust? Bitcoin Touches Down On Parabolic Support
The pattern is characterized by a long sharp move that creates a flag “pole” followed by consolidation within a channel which represents the flag itself. Bull flags are often found slanting slighting downward, as the pattern gives bears the false sense they are winning, which results in an even sharper move higher when these traders realized they were wrong.
Will the bull flag pattern confirm? | Source:
The Psychology Behind The Chart Pattern Breakout
Bears sure seem to be in charge of Bitcoin price action as of late, but bulls could be preparing to blindside bears with a breakout of the bull flag pattern and short squeeze.
The psychology of the bull flag is the perfect setup: A pole is caused by bullish buying and shorts covering. At the local high, price repeatedly is rejected making lower highs and lower lows. Bears celebrate and but become complacent, even adding to losing short positions.Related Reading | Why Bitcoin Bears Might Not Get To Buy New Lows
When bulls gain the upper hand, the resulting breakout is often even stronger than the pole itself, because more shorts have piled on who cover, combined with any incorrect positions that have accumulated during the pattern itself.Bitcoin price is currently at $43,000, and if the pattern is valid, based on the measure rule the target would be closer to $82,000. Serious momentum from buyers and shorts covering both would be necessary to restart such a powerful trend.
Doubling in value from one price pattern alone would be shocking for bears and bulls alike, but it would be accurate based on a variety of factors. For example, the bull flag is touching down on what could be a parabolic base three, or an Elliott Wave impulse wave five just beginning. It also could be one big trap for Bitcoin bulls who could get caught in further downside.
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Featured image from iStockPhoto, Charts from TradingView.com
