A US 25 basis points rate cut is due to be announced later on Wednesday. With Bitcoin (BTC) almost at the $117,500 last major resistance, will the announcement spark a rally or a sell the news event?
All the ingredients are there for the next big rally
Things are really heating up for Bitcoin. The Trump administration is working on the implementation of a Strategic Bitcoin Reserve (SBR), a fast-growing number of companies are buying Bitcoin for their treasuries, and the US Spot Bitcoin ETFs have bought around 25K BTC since the beginning of last week. Throw a Fed rate cut into the mix and all the ingredients are there for the next big Bitcoin rally.
Small bull flag move playing out – volatility ahead
Source: TradingView
In the short-term time frame it can be seen that the $BTC price is approaching what is probably the last major resistance before getting back to the all-time high at $124,000.
The price has burst out of the top of the small bull flag and is now possibly carrying out its measured move, which would take it up to around $120,000, which is the only other resistance of any note before regaining the all-time high.
All would seem as though it were plain sailing. However, there could be some big market volatility to come later today. Market makers in crypto are not constrained by the same rules and regulations of their counterparts in traditional finance, therefore they are likely to manipulate the market before, during and after the rate cut announcement. This could spike the $BTC price up and down in order to liquidate both long and short positions.
Inverse head and shoulders pattern leads to $120,000
Source: TradingView
The daily chart for the $BTC price reveals another bullish formation. This comes in the form of an inverse head and shoulders pattern. As can be seen above, the price broke through the neckline and confirmed it as support. Since then the price has moved higher, and just needs to break through the horizontal resistance and the top of the channel in order to reach the measured move of $120,000.
Is this a large bull flag?
Source: TradingView
The weekly time frame view of the $BTC price puts things nicely into perspective. Looking at the chart, it does suggest that the price action over the last 10 weeks has been within a big bull flag. The all-time high can be seen as a fakeout that has its candle body still within the confines of the flag.
What is rather exciting at this point in time is that the flag has broken to the upside, and that this week’s candle appears to be confirming the breakout. This is a much bigger pattern than the tiny bull flag already mentioned, plus the inverse head and shoulders pattern. In fact, the measured move for this bull flag is up to $130,000. Hold on to your hats!
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.