Bitcoin Price Forecast: Head and Shoulders Pattern and Potential Breakout

A possible bullish head and shoulders pattern is in the process of forming on the daily chart for Bitcoin. The right shoulder low at 60,150 is slightly above the left shoulder at 59,573, indicating improved strength. Of course, a decline below the right shoulder will invalidate the current pattern. But it may result in an adjusted right shoulder rather than the beginning of a bearish continuation.

Bullish Head and Shoulders Pattern Sets Up

Bitcoin has been repeatedly testing resistance of the 50-Day MA since it fell below the line in mid-April. It is getting close to converging with the neckline of the head and shoulders pattern thereby adding to the significance of each line. Nevertheless, a bullish breakout of the pattern is triggered on a move above the most recent swing high at 65,523. Bitcoin would also be above the 50-Day MA at that point. Otherwise, it may further consolidate as it gets closer to the crossing of the uptrend and downtrend line.

Upside Breakout Above 65,523

The highs of the past seven days at 63,470 can be used as a proxy for the price of the downtrend line. An advance above it triggers a bullish signal. But, as noted above, not a breakout of the head and shoulders pattern as the 65,523 marks that price level.

If an upside breakout of the pattern triggers the 67,273-swing high becomes the next target. Despite a bullish breakout of the head and shoulders pattern, an upside breakout would have Bitcoin heading in a range of consolidation and potential resistance. How it performs when hitting consolidation will be telling as to its strength and momentum.

Minor Correction may be Getting Closer to the End

Typically, a bullish breakout of a pattern sees an obvious pickup in momentum as prices progress higher. That should be seen with Bitcoin’s pattern breakout if it is to occur. The retracement from the record high of 73,836 has seen little selling pressure as Bitcoin has held up well, falling in a consolidation formation. Support was clearly seen following a retracement to the 50% level. Further, although it has fallen below the 50-Day MA, it has stayed above the uptrend line.

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