Key Points
- Bitcoin’s (BTC) price may break out from its current range, based on a popular chart pattern.
- Macroeconomic news this week could significantly impact the Bitcoin price.
Recent chart analysis suggests that Bitcoin‘s price may break out from its current range.
In a four-hour chart, Bitcoin’s price has formed an inverse head and shoulders pattern. This pattern is often used by technical analysts to predict a reversal from a previous downtrend.
Technical Indicators and Predictions
According to this pattern, Bitcoin could rally upwards if a break above the trendline occurs. Crypto investor Quinten Francois noted this pattern on Bitcoin’s chart, although he acknowledged it’s not the most beautiful inverse head and shoulders he’s seen.
Bitcoin has nearly reset some key technical indicators, including the moving average convergence/divergence (MACD). This could suggest more upward momentum, according to a crypto analyst known as Jelle.
On the daily chart, Bitcoin’s relative strength index (RSI) stood at 49, up from 33 on May 1. This suggests that Bitcoin’s price is currently at fair value. The RSI is a popular indicator used to measure whether an asset is oversold or overbought based on recent price changes.
Market Sentiment and Macroeconomic Factors
Despite the positive chart pattern, the sentiment around Bitcoin is still uncertain. This week’s macroeconomic developments, particularly the Consumer Price Index (CPI) on May 14, could significantly impact Bitcoin’s short-term price trajectory.
Matt Bell, the CEO of Turbofish, noted that while the 4-hour chart hints at a potential trend reversal, Bitcoin’s price action is tightly bound within a narrow trading range. Factors like United States macro data and insights from Jerome Powell, chair of the Federal Reserve, could introduce a new wave of volatility to the crypto market.
Bitcoin’s retrace to $56,000 has likely marked the local price bottom, according to crypto analyst Rekt Capital. Furthermore, Bitcoin’s distribution danger zone ended on May 6, as Bitcoin rose above the $65,000 mark.
However, Bitcoin faces significant resistance around the $63,500 and $63,700. A move above $63,700 would liquidate over $516 million worth of cumulative leveraged short positions.
