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, cryptocurrency, BTCUSD, BTCUSDT](https://cryptonewmedia.press/wp-content/uploads/2020/12/Bitcoin-Price-Eyes-26000-on-Bull-Pennant-Breakout-on-1H.png)
Bitcoin Bull Pennant structure. Source: BTCUSD on TradingView.com
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).
![Bitcoin, cryptocurrency, BTCUSD, BTCUSDT](https://cryptonewmedia.press/wp-content/uploads/2020/12/1608286870_607_Bitcoin-Price-Eyes-26000-on-Bull-Pennant-Breakout-on-1H.png)
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.
The post Bitcoin Price Eyes $26,000 on Bull Pennant Breakout on 1H Chart appeared first on Crypto new media.