Bitcoin remains on course to continue on its path to glory, despite dipping to $9,600 overnight. Having clearly set up a wedge on the weekly chart, it looks as if it’s just a matter of time before Bitcoin kicks on further, with alts well placed to join it.
Weekly Wedge Looks Promising
Bitcoin has spent much of February retracting having failed to break past $10,500 in the first week of the month, which has set a new weekly trendline and created a wedge whose support line dates back to this time last year:
The wedge clearly shows the range Bitcoin has been bouncing between for the past year, and its current positioning gives us two options (if we are to assume a bullish stance, which fundamentals suggest we should).
The first potential scenario is that Bitcoin breaks through the resistance level, which currently sits around the $10,250 mark, after which it would be crucial that it treats this newly broken resistance as support. If it can do that, then the stage is set for a continuation of the bull market.
If Bitcoin cannot break above the upper trendline then we will likely see a market-wide pullback, with Bitcoin able to as low $7,500 and still maintain a bullish perspective.
We would expect a bounce on the lower trendline at the very worst before another assault on the upper trendline. This may not happen at the first attempt, but the bullish outlook remains a breakout at some point in the next few weeks.
It’s Make Your Mind Up Time
On the daily charts we can see that Bitcoin doesn’t have long left to make its mind up about the direction in which it is headed:
It is currently sitting right above the week-long support line it has created for itself, but the fact that it managed to jump back inside the wedge after dipping outside it overnight suggests that there is enough momentum to break upwards, although to achieve this we really need to see a daily close above $9,745.
The wedge is due to close by Thursday, so at least it won’t be long before we know Bitcoin’s short-term direction.
Alts Look Good to Go
Alts are, as usual, reliant on Bitcoin’s moves, but if we are to use Ethereum as a bellwether, we can see that the ETH/BTC chart has formed a clear support line since its jump up two weeks ago:
Clearly the momentum has fizzled out a little and it has held around the ₿0.027 area since arriving there, but the fact that this support zone has been so frequently observed indicates that ETH, and therefore other alts, could be about to run and take back some of Bitcoin’s dominance has gained in the last week or so.
No Position is Still a Position
In summary, Bitcoin’s short-term direction will be decided within 72 hours, with alts likely to get an extra push compared to their BTC pairings once the dust has settled. We would therefore advise waiting on the sidelines until Bitcoin has made its move before entering positions, unless you are completely confident in the market direction.