Bitcoin: Falling wedge breakout?

Trend Reversal patterns fall into various categories. One of them, a very reliable one, is the Rising or Falling Wedge.

A Wedge is characterized by a gradually contracting range of values, either in an upward or a downward direction. Essentially the price oscillates up and down between a range, and this price range keeps getting smaller. Price seems to touch the edges of the trendlines, until it eventually breaks outside of them. An upward sloping wedge is known as Rising wedge, while the downward sloping wedge is known as Falling wedge.

A Falling Wedge pattern can be a bullish reversal signal. The Prior Trend should ideally be a long downtrend. Price declines have been losing momentum over time, respecting the Lower Support Line, and the Upper Resistance Line. Effectively, there has been a Contraction of the range.

Breaking outside of the structure usually offers a great risk-reward ratio for a bullish trade.

Below you can see a Wedge Pattern forming after a long and powerful downtrend started with the double top struck in November 2021. With Bitcoin breaking away from the structure, there is a reasonable expectation for price to increase by roughly the back height of the wedge.

In this case, it is possible that Bitcoin targets the $45,000 area. The intermediate target is the $30,000 area from which a retest of the breakout point is very likely.

LARGER TIMEFRAME

SMALLER TIMEFRAME

For a swing trade, entering long here, and exiting around $30,000 offers a great risk-reward. Stop Loss would be if Bitcoin price re-enters the Wedge.

For more of a medium term price target, riding to $45,000 might prove a smart move. Major resistance is at the $30,000. If that level is overtaken, there is literally an air gap, and a straight shot at $45,000.

DISCLAIMER:

The above are my opinions only. Due your own diligence and trade at your own risk. Nothing contained in this website should be construed as investment advice. Any reference to an investment's past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit.