Bitcoin has jumped the $7,000 ceiling it has been battling since March as it aims to continue its recovery, although a rising wedge pattern could put paid to bullish sentiments. The direction is largely dependent upon how the daily close, with bulls hoping that a break out of the wedge will signal a further recovery.
Rising Wedge in Play
Bitcoin has been observing a steady upward trend since crashing to $3,850 in March, with a support line having been firmly established and tested on three occasions, setting higher lows each time.
This would ordinarily be good news, but at the same time it has not been setting higher highs, leading to a rising wedge developing:
As we can see, Bitcoin is currently fitting the textbook definition of a bearish rising wedge pattern, although this would be invalidated by closing the day above $7,100. Achieving this would put Bitcoin in a great position to head towards the $8,000 area before a further test, with alts likely to follow suit.
However, were Bitcoin to fail in its attempt to break out of the wedge then this would almost certainly lead to more downside, with the $5,500 region being a potential buying opportunity.
No Help From Technicals
So which way are we headed? Other technical indicators are giving us conflicting information – for example, the MACD flipped bullish on the 4-hour chart but the RSI is over 70, which is overbought territory.
The S&P 500, to which Bitcoin has been incredibly correlated of late, has been ranging for the past week, offering very few clues as to where that market may be headed next, thus offering no hints to Bitcoin holders either.
So that’s it. We’re out of cheat codes. We’re just going to have to wait this one out, folks.