Bitcoin Price Forecast: Bullish Patterns Evolve Amidst Underlying Weakness

Volatility remains muted in Bitcoin as it shows further sign of underlying weakening that could lead to a deeper retracement before new record highs. Resistance was seen this week at a high 67,273, right around orange 50-Day MA, which had previously marked support. A pullback followed but it has been shallow so far. That high attempted a breakout of a weekly bullish hammer candlestick pattern from last week with a high of 66,929.

Forming Bull Flag and Bull Wedge

Given this week’s swing high, there are now two bullish patterns evolving on the chart. There is a bullish wedge that will end before May 18 (apex of declining wedge) that is forming inside a potential bull flag. The bull wedge looks like a symmetrical triangle but is pointed down. The lower trendline support starting at (B), marks the lower boundary of each pattern. Therefore, Bitcoin may yet pullback to test that line as support before it is ready to move higher.

Key Support at Lower Wedge Boundary Line

If support does not hold and Bitcoin breaks below the line, the next lower target would be around 56,168 to 56,159. That price zone includes a 50% retracement and the completion of an extended falling ABCD pattern. At point (D) the CD leg of the decline will be 127.2% of the AB leg.

Maximum Correction During Uptrend Was 22.6%

Bitcoin has corrected by 19.3% as of last week’s 59,573 low. A decline to the intersection of the lower wedge line and the rising trendline (green arrow) (approximately 58,477), would complete a correction of around 20.8% from the recent record high. This would be consistent with prior retracements from the January bottoms.

Starting from that bottom there have been four prior retracements that range from 20.3% to 22.6%. The point where the two lines cross is the lowest price level before a break below the two lines occurs. Interestingly, a 22.6% correction in Bitcoin would be completed around 57,140, slightly below the 58,477-price level.

Wedge Breakout Triggered Above 67,226

Regardless of the potential for a further correction, a decisive rally above this week’s high of 67,226 triggers a breakout of the wedge. The 72,777-swing high would then be the next potential barrier that could stop or turn the ascent.

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