BULL FLAG For BTC/USD Shows Bullish Potential - Trading-GuruIn this technical analysis we are reviewing the price action on Bitcoin. The bull flag is a very powerful signal and I will be explaining how you can trade it.
Both flags and Pennants are quite similar to each other and have proven to be powerful chart patterns in technical analysis. They are considered 'continuation patterns'. First of all, it is important to understand where the name is coming from.
If you look at the picture to the left you should get a pretty good idea. The price goes up strongly (in case of a bullish pattern, downwards for bearish) and then enters a moment of soft consolidation with a slightly bearish trend (or in case of a bear flag it should be bullish, you get the point). If you squint your eyes you can see that it resembles a wavy flag on a pole.
The price is expected to continue in the direction of the move it had seen before (in this case the strong upwards momentum) after it breaks out of the flag.
Furthermore, we can see some very interesting behavior at the $14,000 and the $16,000 mark that I want to explain.
The horizontal zone at the bottom of the chart was exactly at the $14,000 level. An area of psychological resistance. Once the price broke through, BTC made a huge surge directly towards $16,000 without stopping.
Similarly if we look at the $16,000 horizontal level we can see that it is marked by a psychological resistance. We very often see that prices reverse exactly at beautiful round numbers. We might see some resistance at first again when the price comes near. But once it breaks through this level the price can go up very fast, similarly to what happened at the $14,000 level.
All-in-all I suggest a long trade here, initiated by a breakout of the bull flag. After that, I suggest holding to at least $16,000. If the price is near that level you can either sell just below the psychological resistance (e.g. consider setting your take profit limit order at around $15,990) or HODL BTC for unseen levels.
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- Trading Guru
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Disclaimer!
This post does not provide financial advice. It is for educational purposes only!
