Key Points
- Bitcoin’s price has formed a bullish chart pattern, potentially indicating a significant rise in the near future.
- The success of this pattern could depend on a major catalyst, like the Federal Reserve’s economic interventions.
Technical analyst Peter Brandt has identified a promising chart pattern in Bitcoin’s recent price movements.
Brandt, who boasts a following of over 700,000, observed that Bitcoin has formed an inverted right-angled broadening triangle. This is a bullish chart pattern first identified by Richard Schabacker in 1934.
Understanding the Pattern
Known as the falling broadening wedge, this pattern is often indicative of a strong bullish breakout over time. It forms when an asset creates two descending trendlines, as seen in Bitcoin’s case. The upper side of the wedge was formed by connecting the highest points from March to July, while the lower side connected the lowest levels in the same period.
This pattern has a history of success, notably in early 2020 when the Covid-19 pandemic began to spread globally.
Moreover, Bitcoin has also formed a hammer candlestick pattern, characterized by a long lower shadow and a small body. For the bullish pattern to play out, Bitcoin must stay above the lower side of the hammer. A drop below this point would negate the pattern and suggest further losses.
The Role of External Catalysts
The successful execution of this pattern could require a significant catalyst, similar to the one provided by the Federal Reserve in March 2020. In a recent note, Chicago Fed President Austan Goolsbee suggested that the Fed would intervene if the economy falls into a recession. This could involve cutting interest rates and possibly, implementing quantitative easing.
There are indications that a recession could be on the horizon. The Sahm Rule, which monitors the jobless rate, shows that the unemployment rate has been rising for four consecutive months. Historically, this pattern has always been followed by a recession in the past 75 years.
