Bitcoin’s consolidation is coming to an end. A triangle has been forming over the last few months and it’s soon to terminate. This will likely be accompanied by a transition from a consolidatory phase to a trending phase. The triangle is the second part of a bullish pennant and retraced roughly to the 0.382 level of the ‘flagpole’ rally, as shown in figure 1.
A bullish pattern occurring around support is clearly even more bullish. Figure 2 looks at the volume action.
As indicated by the purple arrows, volume is increasing throughout the trending part of the pattern. This is indicative of strength in the upward move. Volume peaks as the market makes a high-volume top on June 26th. From there, the market is in consolidation phase. Declining volume confirms this and suggests a resumption of the prior trend is probable. Volume is currently at very low levels, meaning a breakout from the triangle is very imminent. This consolidation has been relatively long in duration which means the following trend phase will probably also be a long one.
If Bitcoin breaks out of the triangle to the upside, where should we be targeting? Well, a thrust measurement would target the area around $15,000 depending on when exactly it breaks out, as shown in figure 3.
If it breaks below the triangle, the first potential supports to look at are the 0.5 and 0.618 levels.
The converging nature of triangles will force Bitcoin to break out very soon. Trend, intrinsic and extrinsic sentiments all point to a breakout to the upside. A break to the downside is less likely but possible. In either case, the next trend phase is likely to be a powerful one.