As Bitcoin (BTC) continues to trade within its local range, the cryptocurrency eyes a trend continuation, aiming to go on uncharted territory again. Despite the bullish setup, an analyst suggests that investors start to become more cautious as the weeks progress.
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Bitcoin Bull Flag To Determine Next Move
Since the early July breakout, Bitcoin has been trading within a crucial price range, hitting its latest all-time high during this period. The flagship crypto has been hovering between $114,000-$120,000, retesting the local lows on Friday before recovering the range highs over the weekend.
Amid this performance, market watcher Crypto Patel highlighted that BTC is trading inside a bull flag formation in the 4H chart, which could lead to an 8%-12% move once broken out.
According to the analysis, if the cryptocurrency successfully breaks above the pattern’s descending resistance, near the $120,000 mark, its price could see a surge toward the $130,000 barrier for the first time.
On the contrary, a rejection from this area could send Bitcoin toward the bull flag’s support, around $114,000, once more. The analyst warned that despite the key support’s strength, a breakdown below this level would invalidate the bullish pattern and risk a drop to the $100,000 level or below.
In a Monday analysis, analyst Rekt Capital also discussed BTC’s bull flag in the weekly chart. He noted that Bitcoin closed last week above the bull flag top despite the Friday drop, “preparing and positioning itself for a confirmed breakout.”
Therefore, the start-of-week pullback could be considered a volatile post-breakout retest if the cryptocurrency closes this week above $119,200. The analyst explained that “price has an entire week to do that; in fact, price could downside wick below the Bull Flag bottom to form a potential Diamond-Shaped candlestick formation in the downside wicks.”
“It makes sense why price needs to dip,” he detailed, “it also makes sense for price to dip via the perspective of the newly formed Weekly CME Gap.”
BTC’s Rally Running Out Of Time?
As Daan Crypto Trades pointed out, BTC opened the week with a new CME Gap between $118,297 and $120,035, which was immediately closed on Monday, as the price retraced to the $117,000 mark.
Notably, the flagship crypto has been closing its CME Gaps at the start of the week for the past five weeks, “building quite the streak at this point.” To the trader, “the longer this goes on, the more of a self-fulfilling prophecy it will become.”
Rekt Capital also highlighted that Bitcoin has entered Week 4 of its second Price Discovery Uptrend, asserting that if BTC confirms a breakout from the weekly bullish flag, then “trend continuation in Price Discovery Uptrend 2 would be achieved.”
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He warned that the second Uptrend could not last much longer. According to the analyst, the trend continuation could fail in the coming weeks, as the cryptocurrency transitions into the Weeks 5-7 of this phase.
It’s worth noting that this cycle’s first Price Discovery uptrend lasted around 6-7 weeks before reaching the local top. As a result, he considers it “would be conservative thus to become increasingly cautious as time goes on,” starting to become “cautiously optimistic” from this week on.
As of this writing, Bitcoin is trading at $117,161, a 2.1% decline in the weekly timeframe.
Featured Image from Unsplash.com, Chart from TradingView.com
