Bitcoin Price Eyes $26,000 on Bull Pennant Breakout on 1H Chart

Bitcoin Price Eyes $26,000 on Bull Pennant Breakout on 1H Chart

The cost to buy one Bitcoin unit could surpass the $26,000-level according to a textbook bullish indicator forming on its lower timeframe chart.

Dubbed as “Bull Pennant,” the pattern forms when an asset forms a Triangle-like structure after forming an upward flagpole. Traders perceive it as a signal of bias continuation, i.e., they believe the asset would continue in the direction of its previous trend after breaking the Triangle structure.

Bitcoin 1H Chart

Bitcoin is forming a similar Bull Pennant on its one-hour (1H) chart by showing the following characteristics:

  • Flagpole: Before forming the Pennant structure, the BTC/USD exchange rate was rallying higher. It resulted in the formation of a flagpole.
  • Price Fluctuation: After forming a flagpole top, BTC/USD started consolidating sideways while leaving a trail of lower highs and higher lows behind. That gave it the shape of a triangular structure — the Pennant itself.
  • Volume: The volume declined as BTC/USD fluctuated inside the Pennant.

Bitcoin Price Eyes $26,000 on Bull Pennant Breakout on 1H Chart

Bitcoin Bull Pennant structure. Source: BTCUSD on TradingView.com

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Traders now wait for a break above the Pennant to confirm their extended bullish bias. Should such a move happen, it would shift the upside target by as much as the Flagpole’s height. In the current case, the height is nearly $3,200. That means the breakout move would push BTC/USD at least towards $26,294, as measured from the Pennant’s apex.

Bull Pennants have a 70 percent success rate, according to a study conducted by Samurai Trading Academy. Therefore, there may still be a 30 percent possibility that the current bullish continuation pattern may end up being invalid. Should it happen, the BTC/USD exchange rate would risk correcting lower — again by as much as the Flagpole’s height.

That would roughly bring the pair down to $20,000, the previous resistance target, which now serves as a support level.

Weekly Chart

The long-term timeframe charts support the bearish correction outlook. After logging back-to-back gains, the Bitcoin market now stands overheated. The Relative Strength Indicator on Bitcoin’s weekly chart shows the same with its overbought signals (RSI is above 70).

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Bitcoin Price Eyes $26,000 on Bull Pennant Breakout on 1H Chart

Bitcoin RSI expects the price to correct lower. Source: BTCUSD on TradingView.com

In simple terms, Bitcoin is trading at a higher rate than its ideal bid. That typically leads to neutralizing price moves to the downside. Should it happen, the cryptocurrency risks plunging by at least 20-30 percent to bring its RSI back into the normal zone. That would automatically bring the BTC/USD exchange rate close to/below $20,000.

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