After dipping down to the low $8,000s, BTC made a considerable comeback on Thursday raising prices for the popular coin to the low $9,000s. At the time of writing, BTC is trading against the Dollar at $9,113 and change which not only breaks the bear pattern set up over the past two days but set a new bar for Bitcoin. The current outlook suggests $9,500 is well within reach for BTC. It would seem that we are looking at Bitcoin back in a bullish trend.
The gains of today are a breath of fresh air for the bulls since just yesterday many analysts were reporting slow gains and eventual recovery. The fact that BTC gained more than 3.5%, however, means the recovery may have already happened. For the past two days, bitcoin was trading below the 200-day moving average signalling the beginning of a bear run but prices below $8,700 would have had to hold on longer if the bears were going to take the price in their direction. Instead, prices seem to have bottomed out and are now on their way up once again.
In fact, when prices surged today, they did so with enough gusto to create an upside down head and shoulders pattern on the charts. The pattern signals continued gains for BTC and Bitcoin’s continued rally fits the bill perfectly.
On the hourly chart for Thursday, the inverse head and shoulders pattern is clear. The lows and highs of the bearish trend had already been established, but when those lows and highs started trading higher the new resistance to beat became $9,500 instead of the $9,000 where it had already been.
In addition to the upside down head and shoulders pattern, trading volumes were up as well. Steady and confident buying patterns represented on the charts signal a steady climb for Bitcoin over the next couple of days.
An inverse head and shoulders pattern does not always indicate an incoming bull run as many may point out but in cases like what we are seeing with Bitcoin now, the pattern is usually a sign of good news. The pattern in question came just after a steep degradation in price. After the fear of an asset losing too much value in too short a time, a comeback like this generally spurs a new wave of buying which then pushes prices even higher than before.
That said, the occurrence of an inverse head and shoulders pattern during a context like the one we are now looking at will often briefly drop in value before climbing back up – a process that strengthens the positions held by investors.
The daily charts also indicate a strong stance for BTC. The RSI is finally on the rise which means the bottom has come and gone and the MACD is looking positive as well. At this point, the only thing that would see Bitcoin returning to its recent bear run is a close beneath the $8,700 mark. Stay tuned for updates.