It looks either a bull run or bearish reversal as Bitcoin heads into the weekend session with aplomb gains.
The benchmark cryptocurrency surged during the Asian session, reclaiming $18,000, a level it held as support halfway through the European trading hours. Its upside picked little momentum entering the New York trade, pointing to a positive Friday session overall.
Bitcoin now faces a short-term bias conflict between two dissenting indicators. Here is a detailed discussion on how they may impact the cryptocurrency’s next price trend.
Bitcoin Bull Pennant and Double Top
The Bitcoin price on an hourly chart is breaking out of a Bull Pennant. Simultaneously, the sheer absence of trade volume in the cryptocurrency’s latest upside move is limiting its bullish momentum, leading to a top formation that is almost close to its previous peak.
That points to a Double Top formation, a bearish reversal indicator that typically appears after an overstretched price rally.
The Bull Pennant expects BTC/USD to continue heading upwards towards $19,972 (~$20,000), given a technical description that puts the pattern’s breakout target at a level same as the Pennnt’s maximum height. So far, this structure is failing to meet one criterion: the trade volume.
Meanwhile, the Double Top pattern remains half-baked. It needs to establish a second peak, followed by a decline towards the so-called “support break.” It is the common price floor between the two peaks.
The pice should then break below the support line, accompanied by a surge in trade volume, to test its downside target situated as far as the Double Top pattern’s height. That puts the Bitcoin price target near $16,392.
Short-term fundamentals favor a bearish outcome. It is because Steven Mnuchin, the US Treasury Secretary, has ended some of the Federal Reserve’s credit facilities (worth $455 billion). Many analysts and economist warns that the decision would accelerate the US economy’s deterioration.
Bitcoin has rallied strongly this year against the Fed’s emergency lending programs. But with their conclusion, investors’ focus could shift back to the US dollar as their short-term safe-haven. Bitcoin’s rival gold is already falling on the news.