It is past noon in New York, and Bitcoin is resuming its uptrend after undergoing a brief pullback in the Asian and European session Thursday.
The benchmark cryptocurrency climbed 2.19 percent to trade near circa $13,570 as of 1335 EDT. Its upside move followed after testing a bullish parabola (referred to as ‘Wave 3’ in the chart below). Traders interpreted the area as their cue to accumulate Bitcoin. That led to a modest price gain.
It was the 17th time since September 2 that Wave 3 offered support to fuel Bitcoin’s uptrend. The pattern also served as a reminiscent of two other waves that formed between March and August earlier this year. Each showed Bitcoin in a parabolic rally that resulted in a long consolidation phase.
‘Wave 1,’ for instance, offered support to the BTC/USD rally from $4,857 to $9,705. After the pair broke outside the parabola, it consolidated sideways in the range defined by $10,201 as resistance and $8,795 as support. The ‘Wave 2’ gave similar results as a price floor to an uptrend from $8,815 to $12,486.
Likewise, breaking outside its parabola led the price sideways – inside a $10,201-12,153 range.
Another Consolidation
The Wave 3 parabola hinted to repeat its twin fractals. So far, the price is holding the pattern as support while trending upwards. Nevertheless, it risks breaking below the wave and starting a new sideways consolidation trend altogether.
Should that happen, BTC/USD would fall towards the top of the previous wave ‘Wave 2.’ That is roughly near $12,153-12,486.
From there, a pullback would take the pair back towards $13,845 – or whichever level from where the parabola originally tops. Bitcoin expects to fluctuate inside the said range unless traders break above the $13,845-resistance – as has happened with the price floors of previous parabolas.
Such a scenario would have bulls eye $16,000 as their next price target.
Bitcoin Fundamentals
At least fundamentals support the scenario. Bitcoin could consolidate in the $12,153-$13,845 range up until the US presidential election on November 3. A clear win for either Joe Biden or Donald Trump would pave the wave for the long-delayed coronavirus relief package.
As a result, Bitcoin bulls would likely push the price towards or above $13,845 as their hedge against a potential US dollar decline (Stimulus weakens the greenback).