The Bitcoin price index has shot up relatively strongly from lows of around $29.2k and it might look towards the resistance at $40k. The new trend known as megaphone bottom pattern is showing some promise according to analysts and might result in this upside breakout in the near future. For now, the price index is stalling above $34k.
The Megaphone Bottom
The megaphone pattern is when the price index moves in between two diverging trendlines. This happens when there is a disagreement among buyers and sellers regarding the next price trend. As a result of this move, the asset (in this case Bitcoin itself) forms higher short-term peaks and lower interim lows. This disagreement is obviously the main ingredient behind the cryptocurrency’s latest price movement during the last few weeks. It has gone to as high as $41k and as low as $28.8k, neither of them resulting in any permanent change in the index. For now, the next target for the bulls is at around $35k and that is where we are facing the current resistance.
Image Source: Trading View
Overall, the volatility is limited in the overall Bitcoin market. If it plays out as it has done historically, the price index will undergo a breakout to $40k in the near future. However, any move above that long-term resistance will be difficult according to the megaphone approach. The bears are then expected to get back into action and bring the price down to the lower supports around $30k again. However, a major bullish driving force might come into play and raise the index above $40k to nullify this arrangement.
Bitcoin’s Recent Woes
Bitcoin went below $30k again earlier this week but witnessed a strong comeback above this key level. This means that the buying activity at or below $30k is strong enough to repel any further advancements from the bears. However, at the same time, the bulls aren’t strong enough to make decisive moves of their own, leaving the long-term future in limbo at the moment. This lack of intent from the bulls to go above convincingly and the bears to run out of steam just below $30k means that the $29k-$40k range is where the index will remain for some time. This consolidation has been going on ever since the digital asset dropped dramatically from above $50k to $30k back in May. It appears like this alternating move in between $39k-$40k might continue for a while.