A long-term outlook of the Bitcoin market shows its price hitting $19,030 in the coming sessions.
According to a setup presented by one TradingView contributor, the world’s leading cryptocurrency is in the first stage of an inverse Head & Shoulder (IH&S) breakout. In retrospect, an IH&S pattern appears when the underlying security forms three troughs on a baseline, with the middle one the lowest of all.
Traders treat IH&S as a bullish indicator for its ability to foretell a downtrend reversal. They further expect the pattern to catalyze fresh bull runs while eyeing upside targets of as much as height as the size of the middle trough.
And that is where things start turning super-bullish for Bitcoin.
The Bitcoin Bull Setup
The TradingView analyst noted that the cryptocurrency has already formed an IH&S pattern. It made the left and right troughs during the November 2019-January 2020 and the May 2020-July 2020 trading session, respectively. It also painted a middle trough – the deepest one – during the February-March 2020 period.
At the same time, Bitcoin established a baseline (or neckline) at $10,200 after repeatedly testing it as resistance. That completed the IH&S setup, barring the breakout.
Bitcoin IH&S setup, as presented by Stargazer_fx. Source: BTCUSD on TradingView.com
As of this week, Bitcoin broke above the neckline, accompanied by moderately higher volumes, a move that confirms a bullish breakout. The analyst noted that BTC/USD is now targetting $13,829, but have a strong likelihood of a full retracement towards the $16,510-level – as per the height of the IH&S pattern.
That move would bring the cryptocurrency in proximity to Bitcoin’s resistance structure from 2017 at $19,030.
“Bitcoin price made a strong break above long-term resistance,” the analyst said. “And, after formingpattern, the price made breakout and retest of the neckline. [Bitcoin] started to grow after the price makes a retest of the structure and holds above the structure, so I expect the price to move higher.”
So far, the fundamentals support the bull run. Bitcoin is trading 236 percent higher from its mid-March nadir of $3,858, supported by the Federal Reserve’s near-zero interest rates, open-ended bond-buying program, and the US government’s $2 trillion coronavirus relief package.
The expansionary policy has shifted many leading institutions and asset management firms to Bitcoin.
Legendary hedge fund investor Paul Tudor Jones revealed that he has allocated 1-3 percent of his $22bn portfolio to the cryptocurrency. Software firm MicroStrategy dumped $425 million worth of its cash reserves to gain exposure in Bitcoin. And even Square, a multinational payments firm, showed $50 million worth BTC in its balance sheets.
Lately, PayPal also announced that it would enable its users to send, receive, buy, sell, and spend Bitcoin via its existing services. The news served as the main reason behind the IH&S breakout.