The surge out of Bitcoin’s bull flag is happening. So far the price has been as high as $118,400. This may well be surpassed on Friday. Just how high can this rocketship go?
S&P 500 about to break back into the long-term ascending channel?
Source: TradingView
At the same time that Bitcoin is bursting higher, the US stock market is paving the way. The best way to view this is via the S&P 500. After the big dip caused by the Trump tariffs, the v-shaped recovery has been nothing short of sensational. It might be today, or it could be next week, but the index looks as though it can climb back into the ascending channel which has been in force since early 2023. This is good news for $BTC given that a climbing US stock market usually coincides with similar price action for Bitcoin.
Current upside pause just temporary?
Source: TradingView
After breaking out of the bull flag and faking out the first time, and threatening to do so a second time, the $BTC price suddenly shot skyward and reached and surpassed the all-time high at $112,000. A short period of consolidation followed in the form of a flag pennant. However, this soon broke out, and another $7,000 was soon added to the price as it hit more than $118,000.
Since then, there has been a slight retracement into the $117,000s, but this does look temporary, and the price could start to spike yet again at some point during Friday. $130,000 is not out of the realms of possibility.
It does need to be borne in mind that sooner or later, this upward spike will need to start calming down, and it would be healthy for the price to go sideways and perhaps down for a more extended period of time, giving the momentum indicators time to reset, as they are quite overbought now. At what point this might start to happen is unsure at this stage, and there is the possibility of more upside before gravity begins to take effect.
Potential downside price targets
Source: TradingView
While more upside price action is probably favourite right now, it is good to look at the possibilities for potential downside. Drawing in the Fibonacci extension levels for this move, it can be seen that the deepest retracement that could be reasonably expected is to the 0.618 level. This coincides with the top corner of the bull flag, making it a good support level. It can be seen that up to now, the 0.236, the most shallow Fibonacci level, is acting as good support.
At the bottom of this daily chart, the RSI indicator line has just crossed into overbought territory above 70.00. That said, it will need to get above 78.60 in order to avoid bearish divergence on this time frame.
Bearish divergence needs to be annulled on weekly time frame
Source: TradingView
More importantly, on the weekly time frame, the indicator line for the RSI can be seen to be approaching the descending trendline (bottom of chart). This looks tricky for the bulls, and could be a rejection point. If it does break through, it will need to confirm, and then get above 88.40 in order to fully annul bearish divergence on this weekly time frame.
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.
