Bitcoin price this week blasted off from $30,000 to $40,000 in a 25% move. Although the momentum was provided by an epic short squeeze, the leading cryptocurrency by market cap could continue to run much higher if diagonal downtrend resistance is broken.
The breakout would confirm what looks like a bump-and-run reversal bottom, which according to the authority in chart patterns, has the best bull market performance out of 39 other chart patterns. Could this be the signal that bulls have been waiting for to restart their charge?
Bitcoin Bulls Could Be Ready To “Bump And Run”
After one the worst quarterly closes on record and a monthly selloff that wiped out 50% off crypto prices, investors are breathing a sigh of relief with Bitcoin finally headed away from the bottom range around $30,000.
A couple brief plunges to the yearly open were bought up with fury, which eventually led to a reversal and a short squeeze. With Bitcoin price now at around $40,000 once again, the leading cryptocurrency by market cap has formed what looks like the early stages of a strong performing bull market bottom.
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The type of bottom formation is called a “bump-and-run reversal bottom” and it isn’t the first time one has been spotted on the Bitcoin price chart.
The pattern was also potentially the signal that sent the cryptocurrency from $3,000 to $13,000 the first time. If the signal is valid again, could Bitcoin see another more than 4x gain from the bottom? A similar return and rise from current levels, would put Bitcoin on track to reach a price of $130,000 per BTC before the rally is over.
Has the cryptocurrency formed the best performing bull market bottom? | Source: BTCUSD on TradingView.com
Reversal Pattern Bull Market Performance Is The Best There Is
But the question is, is this a valid bump-and-run-reversal bottom pattern? The chart above shows a textbook comparison to the current pattern. Even the volume structure appears similar, with volume increasing during the recovery, but never quite reaching the amount traded on the way down.
According to Thomas Bulkowski who has studied the results of thousands of chart patterns, says that the BARR bottom is the best performing bull market pattern out of 39.
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The pattern is characterized as looking like a “frying pan” with the handle acting as the “lead in” phase. Price action follows a downward sloping trend, which when broken leads to a sharp move to the upside.
After penetrating the downtrend line, Bitcoin could pull back tor a throwback and second “bump.” At that point, the cryptocurrency should put in the final bull signal before the current crypto market cycle has officially ended.
Featured image from iStockPhoto, Charts from TradingView.com