Bitcoin can hit $18,000 in the coming sessions.
The benchmark cryptocurrency is trending inside a Bullish Pennant, a technical structure that forms as an asset consolidates during an upward price trend. The outcome of a Bullish Pennant is typically a breakout – by as much as the flagpole’s height formed during the previous upside move.
Bitcoin somewhat meets the criteria of a Bullish Pennant. The cryptocurrency first rallied by almost $2,400. It then started consolidating sideways while leaving behind a sequence of lower highs and higher lows. The price pattern formed a Pennant-like structure. And it is now awaiting a breakout as soon as the price closes above the Pennant’s upper trendline.
With that said, the breakout can appear anywhere ahead of the Pennant Apex — where the structure’s upper and lower trendline converge. Should BTC/USD break above the pattern, its breakout price target would be $2,400 higher. That brought puts the pair en route to $18,000.
Downside Risks
Before a bullish move, BTC/USD expects to keep consolidating inside the Pennant range.
The considerable gap between the upper and lower trendlines gives Bitcoin traders ample opportunities to place near-term traders. For instance, after testing the Pennant resistance, a pullback could have them open a Short position towards the Pennant support (or $15,139 for its ability to hold as a price floor).
Conversely, a rebound from the Pennant support could have traders place a Long entry towards the Pennant resistance. However, it is important to place a stop loss opposite to their trade’s direction — to ensure that one minimizes its losses should the price change its bias.
Meanwhile, a breakdown below the Pennant support exposes Bitcoin to shift its downside target towards the orange-colored bar in the chart above. That is the $14,000-14,300 area. Traders with a bearish outlook could extend their Short target towards the said range.
Bitcoin Fundamentals
Fundamentally, Bitcoin’s short-term bias stands conflicted due to the unforeseeable impact of the COVID-19 vaccine on the global market sentiment.
Many traders agree that the cryptocurrency would keep rising in the medium- and long-term because of investors’ fears of inflation. At the same time, some anticipate a massive downside correction due to the ongoing delay in the US election results that, in turn, could postpone the second coronavirus stimulus package.
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Bitcoin had rallied by more than 200 percent from its mid-March low, its gains led by the Federal Reserve’s dovish policies, and the US government’s $2.3 trillion fiscal relief.