The co-founders of the crypto analytics firm Glassnode think Bitcoin (BTC) may be setting the stage for a massive rally.
Glassnode co-founders Jan Happel and Yann Allemann, who share the Negentropic handle on the social media platform X, say Bitcoin may be printing a classic bullish pattern that could lead to a big breakout.
“Did BTC just bottom in descending wedge with a classical throw-over?
If this is the case, then BTC should rally to ~$42,000 before a retest of ~$40,500 – and then it should take off to much higher levels. The bigger picture is still very bullish!”
A descending wedge pattern is used in technical analysis to identify potential bullish reversals in an asset’s price. The pattern is characterized by a series of lower highs and lower lows that form a wedge shape on the chart. As the pattern progresses, the distance between the highs and lows decreases, which indicates that the selling pressure is weakening. When the price breaks out of the upper trend line of the wedge, it’s traditionally considered bullish.
The analysts also apply the Elliott Wave theory, which attempts to forecast price movements based on crowd psychology manifesting in waves. Traditionally, Elliott Wave theory suggests that price impulses happen in five waves after three-wave “ABC” corrections.
Looking at the analysts’ chart, they suggest that a bullish reversal is beginning after a five-wave down sequence.
The analysts also say Bitcoin is showing bullish divergence with the Relative Strength Index (RSI), a widely used momentum indicator that aims to determine if an asset is overbought or oversold.
“Bullish divergence into descending wedge! I think you will be very disappointed with your expectations of a break lower.”
Bitcoin is trading for $40,073 at time of writing, up 2% in the last 24 hours.
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