Bitcoin busted through the neckline of its inverse head and shoulders chart pattern to confirm that a reversal is about to happen. Price is closing in on the next area of interest visible on the 4-hour chart, so bulls might be keen on booking profits soon.
The reversal chart pattern spans $5,800 to $6,800 so the resulting climb could be of the same height, taking it up to $7,800 from here. The 100 SMA just crossed above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. In other words, more bullish pressure could kick in and sustain the rally.
However, RSI is already indicating overbought conditions to show that buyers are feeling exhausted. Similarly stochastic is in the overbought zone to signal that selling pressure could return soon. Once both oscillators move south, bitcoin might follow suit.
Price could retest the broken neckline resistance before resuming the climb, but a break below this level could force the selloff to resume.
Bitcoin got a strong boost from reports that institutional investors are renewing their interest in the space. In particular, rallies started after confirmation from BlackRock’s CEO that the company, which is the largest asset manager in the world, formed a team to look into the industry.
With that, investors continue to stay optimistic that the industry is poised for a rebound in the coming months and might be on track to hitting forecasts of at least $20,000 by the end of the year. Regulatory developments such as those in South Korea are also being seen in a more positive light as these could increase the legitimacy and security in the industry.
This allowed bitcoin to outweigh dollar strength even as Fed Chairperson Powell emphasized the upbeat outlook for the US economy. This led to a pickup in risk-taking instead, which lifted higher-yielding assets.
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