Bitcoin prices climbed Monday, suggesting the benchmark cryptocurrency will recover some of its gains following its decline from its record high near $42,000.
The BTC/USD exchange rate was up 1.49 percent ahead of the New York opening bell, trading for $33,630 after correcting lower from its intraday peak of $34,728.
The gains primarily appeared after Tesla and SpaceX founder Elon Musk openly proclaimed that he supports Bitcoin, adding that he is “late for the party” and should have purchased the cryptocurrency eight years ago.
Bitcoin Bullish Indicators
Traders flocked into the Bitcoin market after Mr. Musk’s comments went viral across social media. Nevertheless, profit-takers took control of the market, pushing prices back lower below in the $33,000-34,000 range.
Meanwhile, the recent pullback from the vicinity of the $34,000-mark also confirmed a downward sloping line as resistance. The mentioned trendline, coupled with another falling support line, constitutes the formation of a Falling Wedge on daily charts.
Falling Wedges are bullish reversal patterns and a sustained breakout above their resistance trendlines lead the price higher by as much as the maximum Wedge height. In Bitcoin’s case, the distance between upper and lower Wedge trendline ranges from $10,000 and $12,000.
Bulls might attempt to achieve a close above Wedge resistance before eventually pushing the price above $40,000. The positive momentum could further stretch their target towards the mid-$45,000.
That said, technical indicators on the daily chart have still to confirm a bullish bias. Meanwhile, they warrant caution about potential pullbacks towards the Wedge support, followed by a negative breakout. It would eventually invalidate the entire bullish reversal theory.
The Bitcoin price may then weaken towards the lower $27,000 for a potential rebound move. That also serves as the horizontal resistance, which, if coupled with the Wedge resistance trendline, makes a Descending Triangle pattern.
In that case, the downside target would shift to below $20,000.
