As Bitcoin (BTC) continues to trade within a narrow range, crypto traders and analysts are closely monitoring the asset’s price charts for signs of a potential breakout.
Recent technical analysis suggests that Bitcoin could be on the verge of a price recovery, with the formation of an inverse head and shoulders pattern on the four-hour chart. This pattern is often used by analysts to predict the reversal of a previous downtrend.
TLDR
Bitcoin’s price chart shows an inverse head and shoulders pattern, suggesting a potential breakout and price recovery in the coming days.
Key technical indicators, such as the MACD and RSI, also hint at a possible bullish momentum for Bitcoin.
This week’s macroeconomic news, particularly the U.S. inflation data (PPI and CPI), could significantly impact Bitcoin’s short-term price trajectory.
Some analysts believe that Bitcoin bottomed at $56,000, and if historical patterns repeat, the current pullback may have ended, paving the way for a potential price rebound.
In addition to the bullish chart formation, several key technical indicators are also hinting at a possible upward momentum for Bitcoin. The moving average convergence/divergence (MACD) is close to completing a full reset, while the relative strength index (RSI) has risen from 33 on May 1 to 49, indicating that BTC is currently at fair value.
However, despite the positive technical outlook, Bitcoin’s short-term price trajectory remains heavily dependent on this week’s macroeconomic developments, particularly the release of the U.S. Producer Price Index (PPI) on May 14 and the Consumer Price Index (CPI) on May 15.
These inflation data points could introduce a new wave of volatility to the crypto market, as they may influence the Federal Reserve’s decision on interest rates in the coming months.
Some analysts, like Rekt Capital, believe that Bitcoin’s retrace to $56,000 likely marked the local price bottom. If historical patterns repeat, the current pullback may have ended at this level, setting the stage for a potential price rebound. Bitcoin’s distribution danger zone ended on May 6, as the asset rose above the $65,000 mark.
If $56,000 was not the bottom then this current pullback will have officially equalled the longest retrace in this cycle at 63 days
History however suggests that this current pullback ended at $56000 and 47 days$BTC #Crypto #Bitcoin pic.twitter.com/OfumXZ1qHi
— Rekt Capital (@rektcapital) May 13, 2024
Bitcoin faces significant resistance around the $63,500 and $63,700 levels. A move above $63,700 could liquidate over $516 million worth of cumulative leveraged short positions, potentially fueling a further price increase.
As market participants await the U.S. inflation data, the sentiment around Bitcoin remains cautiously optimistic.
A reduction in inflation could be favorable for risk assets like Bitcoin, potentially putting the market on the verge of a leg higher.
Some analysts expect Federal Reserve Chair Jerome Powell to “pump our bags,” suggesting that the U.S. economy may not be as strong as the data suggests.
While Bitcoin’s price chart and technical indicators point to a possible breakout and recovery, the upcoming macroeconomic events will likely play a crucial role in determining the asset’s short-term price action.
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