Bitcoin Eyes Weekend Conclusion to Two-week Pennant

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Bitcoin continues to range as it approaches the termination of a two-week wedge established from its recent $3,850 low, with no clear path as to its next move. With the monthly close coming up fast however and global markets making big moves, it looks likely that the weekend will provide us with an answer.

Bitcoin Avoids Tweezer Top

Since regaining the $6,500 area on Tuesday, Bitcoin has been firmly caught in a $500 range with little clue as to where it goes next:

Bitcoin Eyes Weekend Conclusion to Two-week Pennant1

On the plus side, Wednesday’s close saw Bitcoin avoid the potential tweezer top that would have signified a likely move down, leaving a daily chart with a very clear pennant formation that is just dying to be resolved:

Bitcoin Eyes Weekend Conclusion to Two-week Pennant2

In order to continue the recovery we need to see Bitcoin break upwards out of the pennant and then use this resistance as support, allowing us to test $7,000 once again. Whether Bitcoin has the chops to push through this pennant at this moment in time however remains unknown, with the general consensus being that many holders are sitting on their stash ready to sell should the impact of the coronavirus pandemic continue and they need to free up some cash.

Among the community, a downward move seems to be the most likely option:

The (Weak) Bullish Argument

Bulls can point to the fact that the S&P 500, to which Bitcoin has been heavily correlated in recent weeks, has seen a 14% recovery since Tuesday, a recovery that Bitcoin has yet to emulate. This barrel scraping exercise shows how tenuous the cryptocurrency markets are at present as well as containing a certain irony that, after campaigning for Bitcoin’s place on the opposite end of the spectrum for so many years, the hopes of some Bitcoin traders now rely on the performance of traditional markets.