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Bitcoin's 2023 Bullish Trendline in Focus as Traders Search for Directional Clues
A bullish trendline is a an upward-sloping diagonal line connecting two or more higher price lows.
Updated Aug 17, 2023, 8:30 a.m. Published Aug 17, 2023, 8:30 a.m.
Bitcoin's slow decline from the July peak near $32,000 has traders focusing on a trendline to indicate the cryptocurrency's directions.
The leading cryptocurrency has rallied over 70% this year in a textbook bullish price action, comprising higher swing lows and higher swing highs.
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The bullish trendline in consideration connects the early January low and the swing lows registered in March and June. As of writing, the trendline was located below $28,000, with bitcoin changing hands near $28,600.
The trendline violation would invalidate the bullish bias, according to Peter Brandt, CEO of Factor LLC.
"As a swing trader, I would respect the violation of the trendline. So, my positions would be either short or flat," Brandt, who has been trading foreign exchange and commodity markets for over thirty years, tweeted Wednesday.
"Only if a bear trap is actually 'sprung' would I consider it a bullish development. I strongly prefer horizontal chart construction," Brandt added.
A bear trap will be confirmed if prices quickly reverse a potential trendline breakdown, leaving sellers on the wrong side of the market. Failed breakdowns of key support levels are widely considered strong bullish signals.
Per Markus Thielen, head of research and strategy at crypto services provider Matrixport, potential invalidation of the trendline could yield deeper losses.
"Prices might fall back and re-test the $25,000 support level associated with the Blackrock Bitcoin ETF filing [if the rising trendline is violated]. Investors are well advised to keep their crypto exposure to a minimum and use options," Thielen said in a note to clients on Thursday.
Bitcoin rose past the stiff resistance of $25,000 in March, flipping the said level into support, which was put to the test in the first half of June before Blackrock filed for a spot bitcoin exchange-traded fund.
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Bitcoin gets 'base case' price target of $143,000 at Citigroup
The Wall Street bank said its bitcoin forecast relies on further crypto ETF inflows and a continued rally in traditional equity markets.
What to know:
- Citigroup's base case for bitcoin (BTC) is a rise to $143,000 in 12 months.
- Analysts highlight $70,000 as key support, with the potential for a sharp rise due to revived ETF demand and positive market forecasts.
- The bear case sees bitcoin falling to $78,500 amid a global recession, while the bull case predicts a rise to $189,000 due to increased investor demand.
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