Bitcoin (BTC) appears to be building its momentum for a price increase, after defending $6,000 last week. However, technical hurdles still present a tough challenge.
Bitcoin is changing at $6,689 on Bitfinex and looks like gaining as well for another test of $6,838, as of press writing. In effect, its level is shaping to be a make-or-break mark, one that might reveal a classic trend reversal pattern, called the “inverse head-and-shoulders”.
Indeed, a close above that level might just be a short-term bearish-to-bullish trend change would open doors for a rally of $7,900 — this is a target which is being measured by adding distance from the resistance to the current low with break-out level.
While the bulls may be too overwhelmed by what might be an inverse head-and-shoulders breakout, they are still warned of being too ambitious. The area between $7,000 – $7,100 attracts more technical hurdles that have to be penetrated in order to prove the bull case.
Hurdle # 1: 0.236 Fibonacci Retracement and Inverse Head-and-Shoulders Neckline
Since Bitcoin failed in absorbing offers and supplies around $6, 850 a lot of times since June 11, it is being established as a technical hurdle. Fibonacci Retracement is a tool used by traders in identifying support and resistance levels.
While bulls may have wanted to breach resistance on an earlier attempt, the constant rejection allows an inverse head-and-shoulders pattern in taking form.
Once a convincing break would hit, it also would confirm inverse head-and-shoulders reversal. That way, it would shift short-term trend into a bullish favor.
Hurdle # 2: Long-term Downtrend Resistance
It’s not a secret that Bitcoin has been a commanding bear grip since reaching its all-time high of $19, 891 last December 2017.
If the inverse head-and-shoulders pattern would take form, the trend line of resistance would also be likely tested in the next hours or days.
A convincing point and above the recent downtrend would definitely carry a strong bullish implications that would surely shift the intermediate term trend into a bullish favor where it would open doors for a move of $7, 900.
A rejection from the trend line would definitely give a competitive advantage back to the bears.