BTCUSD price showed strong bullish momentum with a consolidation breakout and a continuation pattern visible on the 1-hour chart. A bullish flag continuation pattern has just formed, which suggests that further upside is possible.
The 100 SMA is below the 200 SMA for now but it looks like an upward crossover is ready to take place, signaling a buildup in buying pressure. Stochastic and RSI are also heading down, which brings the possibility of profit-taking before further gains.
Once the oscillators reach the oversold areas and turn higher, bitcoin price could resume its bullish run. If this spurs a pullback, BTCUSD could retreat to the broken triangle resistance at $370 or until the dynamic support at the moving averages around $375-380.
Catalysts include the upcoming NFP report which might impact dollar movement. Leading indicators support a downside surprise, which might mean more dollar weakness as traders reduce expectations of a Fed rate in March.
Fed rhetoric has also been highlighting the lower odds of a March hike, which is also dampening demand for the dollar and allowing for more gains in bitcoin price.
Another factor to keep in mind is the possibility of profit-taking ahead of the Chinese market holidays next week. The Chinese New Year is set to start on Monday and this could mean a recovery in financial confidence, thereby lifting revenues and spending data – something that could keep risk appetite in play.
With that, a strong return in buying pressure could lead to an upside break from the current flag pattern. A long green candle closing past $390 could be enough to confirm another leg higher.
The mast of the flag pattern is around $25 in height so a strong breakout from the continuation formation could yield another $25 in gains, taking bitcoin price to $410 and beyond.
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