Bitcoin is forming a Pennant Chart Pattern on the daily timeframe. This is a known bullish continuation pattern that activates after the breakout.
**This pattern has since been invalidated as it did not break through the confirmation level but we still wanted to share the piece for learning purposes.
What are Some Common Things to See in a Pennant Chart Pattern?
Volume diminishes when the price moves closer to the peak. The breakout is confirmed once it takes down the MA200 and $8,400 resistance level. Volume is a crucial part of the breakout and it should start expanding along with the breakout to give reliance to it.
What’s interesting here is that last night Bitcoin dropped below of $8,000, retested support zone ($7958 – $7,665) and the bottom level of the pattern, but the dip was quickly bought which signifies that demand is high in this area.
What’s the strategy with a Pennant Chart Pattern?
The strategy is pretty much the same as with all chart patterns and also dependent on your risk management strategy. You can buy the breakout itself (which is often riskier) or buy the retest of the breakout. So when the Pennant Chart Pattern is unleashed and starts showing signals that support upward movement, such as volume expansion, either of these two strategies can be utilized.
The measured target price for this pattern is around $9,591 but I’d keep eye on the $8,927 level as well.
A break below the uptrend support invalidates this pattern.
In my past reports I have wrote several times about the importance of the unleashed bullish momentum on the larger scale and the importance of it. Why does it matter? It matters because the price is more likely to hold support levels (dips are getting bought) and break through resistance levels easier.
- On the daily timeframe it’s important that the price manages to break through the MA200 because that’s what most of the people are monitoring and the breakout is likely to bring more confidence to investors / traders.
- Oscillators are resetting on the 4h timeframe and this could give enough space to the price to push higher.
- It’s good to acknowledge the risk involved with this trade as when the price climbs higher and you see no major retraces, it’s going to add more risk in to your trades.Please, if any question comes to your mind, don’t hesitate to ask! I try my best to respond ASAP!
If you need help with trading, finding information, or courses let me know and I’d be more than happy to help you!
Things to Remember:
- Stop-loss orders are strongly recommended.
- Beware of buying tops or FOMOS, you might end up losing or waiting long periods of time before getting anything back.
- Do your homework before investing.
Please be aware this is not financial advice. You are responsible for your trading and investing decisions. It is highly recommended to do your own research before investing in anything.
My list of trading tutorials:
Lesson 1 – Beginner’s Guide: How to use Moving Averages to Day Trade?
Lesson 2 – How to trade a selling climax with cryptocurrency?
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