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Bitcoin Price Forecast: Key Trend Lines and Patterns

By:
Bruce Powers
Published: May 9, 2024, 20:47 GMT+00:00

Bitcoin's recent price action shows consolidation within a bull wedge pattern, with two trend lines to watch for a potential breakout.

Bitcoin has been pulling back this week following a test of the 50-Day MA on Monday with a high of 65,523. That advance broke out of a prior descending bullish wedge and expanded the top boundary line of the pattern. The pattern is deeper now showing less price compression than seen in the earlier version. Both the 50-Day and 20-Day MAs are above the current price of Bitcoin and both moving averages are sloping down. However, bearish momentum has been muted.

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Two Trendlines to Watch

There are two trend lines to watch that will cross on May 26. One is rising and the other falling. Consolidation behavior is likely to continue if price stays contained within those lines. Momentum should improve once a line is broken. Although a breakout of a trend line should not be relied on by itself, and strength or weakness should be confirmed with other price action, the uptrend line is significant as it has three touches. But since Bitcoin is consolidating within a wedge pattern, a drop below the line could see the declining consolidation continue with price remaining within the boundaries of the wedge.

Rally Above 65,704 Should Put the Bulls Back in Charge

On the upside, a breakout of the top line of the wedge will be a sign of strength but a move above the recent swing high at 65,523 and the 50-Day MA, currently at 65,704, will be needed to confirm strength. If that happens, Bitcoin should be able to test and possibly exceed the highs.

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Perspective from Weekly Chart

The weekly chart provides additional perspective. Last week Bitcoin found support at 56,500 (low of retracement) and then rallied to end the week with a bullish hammer candlestick pattern. An upside breakout triggered on Monday before it hit resistance at 65,523 and turned down.

Also, looking at the prior weeks since the high shows two prior weeks that had similar price action, a drop to new lows followed by a close in the top quarter of the week’s trading range. It seems that each time Bitcoin has fallen to new retracement lows buyers jump in to support price. Last week’s low found support at the 50% retracement and price was quickly rejected to the upside. Also, notice the purple 20-Week MA that also identified support.

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About the Author

Bruce boasts over 20 years in financial markets, holding senior roles such as Head of Trading Strategy at Relentless 13 Capital and Corporate Advisor at Chronos Futures. A CMT® charter holder and MBA in Finance, he's a renowned analyst and media figure, appearing on 150+ TV business shows.

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