Bitcoin prices nudged higher, setting yet another record high of $29,000 as traders assessed its bullish outlook against a super-weakening US dollar.
The BTC/USD exchange rate corrected lower after hitting the said milestone, highlighting a repetitive profit-taking mode that activates near local tops. But eventually, due to a higher institutional demand for Bitcoin against fears of long-term inflation, the cryptocurrency manages to bounce back from its local lows.
It is the same scenario with the price rally on Wednesday. Bitcoin’s uptrend resume as investors prepare for the New Year holiday break ahead. Eventually, the mainstream markets will close down, except that of Bitcoin, which runs 24/7 without breaking a sweat. The Christmas holiday break has propelled the cryptocurrency from $23,000 to $25,000.
Could a similar upside pattern reappear ahead of New Year’s eve? A technical indicator says a big YES!
The chart below shows Bitcoin breaking out to the upside from a structure that looks like a Bullish Pennant (some would call its Asymmetrical Triangle). In retrospect, the pattern has a bias for bullish continuation, i.e., traders anticipate the price to continue in the direction of its previous trend after the asset forms a Bullish Pennant.
Meanwhile, the price typically grows by as much as the flagpole’s height. It is the upside move that precedes the Pennant formation. In Bitcoin’s case, the height is around $3,280.
That puts the cryptocurrency en route to $30,000 or beyond, as measured from the point of the current Pennant breakout level at near $27,000.
Meanwhile, the fundamentals look strong for the said bullish move. The last 24 hours have witnessed the US dollar crashing to its two-year low, a multi-billion dollar investment firm VanEck refiling for a bitcoin-enabled exchange-traded fund with the Securities Exchange Commission, and Skybridge Capital confirming that it has put about $182 million in Bitcoin.
VanEck, a $49 billion investment firm, just filed an SEC registration for their upcoming VanEck Bitcoin Trust.
— Kevin Rooke (@kerooke) December 30, 2020
David Grider, the lead digital strategist at Fundstrat, stated Wednesday that he sees the Bitcoin price hitting $40,000 in the next 6-12 months.
The Bitcoin price is heading upward without a clue about its potential resistance—it’s an unchartered territory to explore even for chartists. Nevertheless, the cryptocurrency has located a concrete support level near $27,000.
A pullback from new higher highs—wherever they come—could have traders open a short position in the range of $27,000-28,000. Meanwhile, a rebound from there would have them enter a long entry towards $29,000 or above.