- A Cup and Handle (C&H) pattern could emerge following Bitcoin’s rise to a new all-time high.
- Profit-taking off the new high could pull down the BTC/USD pair to support at 50-day moving average (MA) wave.
- The pair then stands to bounce up by 100% to a little above $100,000.
KOLKATA (CoinChapter.com) – A well-followed TradingView-based Bitcoin analyst, TradingShot (T.S.), opined that the top cryptocurrency risks correcting to a little above $50,000 before rallying towards $100,000. T.S. drew similarities from previous Bitcoin market movements to support the analysis.
Cup And Handle Pattern
Moving further into Q4 2021, T.S. anticipates the BTC/USD pair to follow a Cup and Handle (C&H) pattern. Technically speaking, C&H is a chart pattern where the cup resembles a “u” shape, and the handle has a slight downward drift. Analysts/traders generally consider this a bullish signal and leverage it to go long on a particular asset.
Bitcoin’s recovery led to the cup formation after its correction from the previous $64,900 all-time high (ATH). And now it stands to decline into a trough that makes up the handle, T.S. notes. However, the predicted move may not necessarily take shape at current prices, but a little higher.
“Technically, this pattern doesn’t need to see its Handle start with a rejection on the Resistance (which in this case was the 64900 ATH ) but may rise a little higher (FOMO can kick in now) before correcting into the Handle.”said TradingShot
Historically, all major intermittent price corrections occurring during Bitcoin’s parabolic rallies were strongly supported by the 50-day moving average (M.A.) indicator (blue wave). The same support (a little above $50,000) still holds for the benchmark crypto asset’s ongoing price action.
A declining move to the 50-day M.A. would form the trough-shaped handle stated previously. And Bitcoin’s correction to the said support holds critical significance for another technical reason.
Relative Strength Index And Bitcoin Price Corrections
While making a case for Bitcoin’s impending C&H pattern formation, T.S. factored in the resemblance between the flagship crypto’s relative strength index (RSI) trend from October 2020 to January 2021 and the RSI trend from August 2021 to date.
The two trends appear identical, which strengthened the case for a significant correction in Bitcoin’s spot rates.
“What followed after the January 08 2021 RSI was a strong correction, which translated in BTCUSD price terms as a pull-back on the 1D MA50. As the 1D MA50 held, it gave back a +100% rally before the late February correction.”
As per T.S.’s calculations, a 100% upside move from low $50,000 prices would place Bitcoin at $101,000, which resembles the asset’s recent recovery from the $27,800 bottom to $64,900.
T.S. mentioned past corrections, which triggered massive Bitcoin ATH breakouts in support of the arguments in favor of a correction.
- The BTC/USD pair dropped 11% after breaking above $19,800 on December 1, 2020, and then quickly recovered.
- On March 1, 2017, Bitcoin smashed the $1,245 ATH again (then), corrected down by 31%, and then resumed its upside run.
Therefore, a correction is inevitable before Bitcoin’s next leg up, T.S. said in conclusion.