Bitcoin Price Charts Echo Pattern Seen Before 2015 Bull Market
Bitcoin’s drop from a record high of $20,000 clocked in December 2017 has ended up creating a falling channel similar to the one created in the 18 months leading up to the long term bullish reversal seen in October 2015.
If the same sequence of events unfolds, BTC could see a channel breakout later this year.
An early move out of the falling channel cannot be ruled out, but may not yield stronger rally while the crucial 21week moving average is trending south.
The short term bullish view put forward by the long tailed doji candle created on Feb. 27 would gain credence if prices break above $4,040 in the next 24 hours, validating the bullish outside reversal candle on the three day chart.
That would open the doors to re-test of recent highs near $4,200.
A repeated failure to break above $4,040 could end up fueling a pullback to immediate support at $3,927 (March 17 low). Bitcoin’s (BTC) 14 month bear market has ended up creating a similar price pattern to one that paved the way for a bull run in 2015.
The cryptomarket leader is currently trading at $4,030 on Bitstamp, having hit a low of $3,122 in December.
Despite the recovery rally, the price is still down 79.85 percent from the record high of $20,000 reached in December 2017.
Throughout the sell off, the cryptocurrency has charted a series of lower highs and lower lows, known as descending channel in technical parlance.
Bitcoin produced a similar pattern during the previous bear market witnessed in 2014 2015.
More importantly, the upside break of that falling channel, confirmed in October 2015, was followed by a two year bull market. Therefore, a potential upside break of the latest falling channel could be considered a sign of a long term bearish-to bullish trend change.
Weekly line chart
As can be seen above, the price action seen over the last 14 months looks very similar to that seen in 2014 and early 2015.
The previous bear market had stalled with the 14-week relative strength index (RSI) hitting oversold levels below 30 in January 2015. Similarly, the sell-off from the record high of $20,000 hit in December 2017 also ran out of steam with the RSI falling below 30 in December 2018.
So, if history repeats itself, the cryptocurrency may see a sustained channel breakout later this year. An early move above the upper edge of the channel, currently at $4,070, could be seen as several indicators are flashing early signs of bullish reversal.
Further, BTC is trading just below the breakout price at press time.
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