Bitcoin Headed to $100K Following Reliable "W" Pattern Says Analyst
July 17, 2024 (Investorideas.com Newswire) Bitcoin has been stuck moving mostly sideways since it peaked in March. In July it dropped briefly below the prior low of the range. It is now moving back up toward the top of the range and a likely breakout to $100K.
Cory Mitchell, an analyst with Tradequotex.com commented "Bitcoin has formed this same pattern repeatedly over the last year and a half, and it is a common pattern across bull markets in all assets. There is a sharp rise, like the one that occurred in Bitcoin in February and March. The price then has a correction, moves back toward the high but can't gain traction, and drops back to the prior low. The price then rallies, as it is doing now, and often continues to advance beyond the old highs. The median rally percentage during Bitcoin bull markets is 75% (before another 20% or greater decline occurs). That puts a target near $95,000. The average rally is 91%, putting a target near $102,000. Those targets are based on a "typical" rally off the recent $53,550 low. The next rally may not be typical though, it could be much bigger or smaller."
Bitcoin has been in a bull market since early 2023, after bottoming in 2022 at $15,479. From that low to the March high of $73,794, Bitcoin is up 377%.
The following chart shows the common pattern that has been playing out in Bitcoin during this bull market, and which is common in many assets on various time frames.
The pattern looks like a "W" or rectangle if lines are drawn near the pattern's highs and lows.
While the appearance of the pattern changes slightly each time, the overall structure is the same. It can be traded by being patient and not buying the first pullback. If buying on the first pullback it pays to exit near the prior high. The real money has been made buying on the second pullback (the second low point of the W) near the prior swing low. It is after this second pullback that a larger rally typically occurs.
Not all "W" patterns end with a big move higher. The pattern has been reliable during this bull market, but it won't always produce winning trades. Risk must still be managed. Mitchell advises waiting for the price of Bitcoin to get near the prior swing low on the second pullback, and then only enter once the price has risen at least 5% above both lows (the first one as well as the one that just potentially formed). The trade is exited if it falls back below the lower of the two lows.
For the recent Bitcoin move, that indicates an entry near $59,450 with a stop loss or exit point at $53,500. Targets can be established based on any number of criteria. In this case, the target is near $100,000, providing approximately $40,550 of upside for $5,950 in risk. That is a reward-to-risk of 6.8 to 1.
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