Bitcoin could backtrack its way towards $20,000 in the coming sessions, says a chartist at TradingShot, an independent investment advisory firm.
A $21,000 Bitcoin
In his Wednesday note, the analyst wrote that the benchmark cryptocurrency anticipates undergoing a strong rebound move after testing a short-term support trendline. The trendline serves as a part of an Ascending Channel formation, forming a sequence of higher highs and higher lows.
The previous fluctuations allowed the TradingShot analyst to foresee a fractal repeat on Wednesday. Today, the price anticipatedly pulled back after testing the Ascending Channel’s lower trendline, partially validating the analyst’s call of Bitcoin extending its upside move towards the upper trendline, which sits near $21,000.
Bitcoin trade setup, as presented by TradingShot. Source: BTCUSD on TradingView.com
Furthermore, the Channel support coincides with the 200-period moving average wave of the four-hour timeframe chart. The TradingShot analyst noted that it could additionally prompt traders to re-accumulate Bitcoin at the lower trendline levels.
“Technically, with the Channel Up being very consistent since November 05 with its High, Low and middle trend-lines, we should consider this as a very strong support for BTCand a potential rebound point,” he explained. “The next Higher High is placed just above $21,000.”
Risk
Meanwhile, the Bitcoin analyst also spotted a newly-developed Descending Channel pattern that could overshadow his bullish outlook.
In retrospect, the Channel appears as a part of an inverse head and shoulder pattern, with the previous retest of the Ascending Channel support acting as the IH&S bottom, separating two upper trendline retests that serve as the right and the left shoulder.
The analyst focused on the right shoulder, from where the Descending Channel originated.
“With the Nov 26/27 being the Head. So assuming the Channel Up breaks, the Right Shoulder of the IH&S can take BTCUSD as low as the $16200 – 16000 region. With the RSI (on the 4H chart) being on a Channel Down (bearish divergence) since November 05 (matching exactly the Channel Up of the price action), this is certainly possible.”
The downside target near $16,000 coincides with Bitcoin’s 50-day moving average wave, also a support level among traders.