A popular strategist thinks a breakout for Bitcoin (BTC) is possible as long as it can hold a key support level.
Analyst Justin Bennett takes to his YouTube channel for a detailed strategy session plotting out significant support and resistance levels now that the leading crypto has remained below $40,000 for several days.
“Bitcoin is at a critical support area… between $35,000 and $37,000.
Bitcoin is still holding above support. Yes, I realize that the charts don’t look great. The fundamental picture has a lot of obstacles ahead.”
The chart guru says he won’t turn bearish until the $35,000-37,000 support level breaks. For now, he thinks recent price movement suggests Bitcoin could be ready to pull a bullish reversal pattern and send BTC higher.
“Patterns like this, especially after a sell-off like we’ve seen, not just over the past few days but past few weeks and months, typically tends to trigger a bullish reversal.
This is a bullish pattern, typically speaking. Obviously, a close below this area down here [~$36,800] would negate this idea. Right around the high $36’s and the $35,000 level like I’ve talked about before.
If we were to see Bitcoin give up this zone, this whole thing is off the table and we’re probably headed back toward $30,000.
But overall, this pattern does hint at exhaustion from sellers. A broadening descending wedge like this, it’s very similar to a falling wedge where it signals exhaustion from sellers.”
Bennett digs deeper into the charts to assess exactly where Bitcoin bulls might expect to see their optimism confirmed. He says $39,000 and above are what to look for.
“The confirmation for this pattern would be a close above this area up here [$39,000 to $39,600]. Get above this trend line on the hourly, which would come in somewhere around the low $39k’s, and then also $39,600.
Remember, that’s going to be a key level going forward to where we need to see Bitcoin close the day above $39.6k.”
Bennett highlights similar lows back in September and October of 2021, as well as this past January, that preceded rallies.
He concludes his analysis by saying,
“In order to confirm this wedge pattern, I would like to see Bitcoin get above this resistance area up here [$39,000] on the hourly and then also get above $39,600 on the daily time frame.
So that means close the day above this area [$40,100] and then I do think we get that breakout.
Of course, we could see another rotation lower, in which case this area right below $37,000 is going to be support.”
At time of writing, Bitcoin continues to bounce off its Monday lows and currently is up 2.17% to $37,526.
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Featured Image: Shutterstock/Dmitriy Rybin