Bitcoin, the largest cryptocurrency, remains trapped in a consolidation phase, with its price spread narrowing while market uncertainty persists. In the 4-hour timeframe chart, the coin price appears to be getting squeezed under the influence of two converging trendlines. However, after the explosive rally of March’s third week, a short range within the trendlines reveals the formation of a pennant pattern. Here’s how this pattern could help buyers resume prior recovery and whether it’s time to buy Bitcoin.
Understanding the Pennant Pattern
The formation of a pennant pattern increases the likelihood of the Bitcoin price resuming its prior recovery. During price consolidation, selling pressure gets absorbed, and the price showcases its sustainability at higher levels. The pennant pattern is meant to offer a short period to buyers before the bullish rally resumes. In the case of Bitcoin, the pattern is forming under the influence of a bullish continuation pattern.
Potential Breakout and Uptrend Continuation
A potential breakout from the resistance trendline of the pennant pattern will be an early sign of uptrend continuation. Buyers must wait for a 4-hour candle closing above the trendline to obtain an entry opportunity. The intraday trading volume in Bitcoin is $9.9 billion, indicating a 3.6% loss. However, under the influence of a bullish continuation pattern, the coin price is more likely to breach the overhead trendline.
Buy or Wait?
Interested buyers must take a closer look at the current market conditions before making any decisions. The Bitcoin price in its lateral walk showed minimal spread with Doji candles, reflecting the indecisiveness among market participants. By press time, the Bitcoin price trades at $27,931 with an insignificant loss record of 0.02%. If the potential breakout from the aforementioned resistance occurs, it will intensify the buying pressure to reach the next significant barrier of $32,000. Therefore, it may be a good time to buy Bitcoin.
Bearish Breakdown
On a contrary note, a bearish breakdown below the support trendline could offset the bullish thesis. In that case, buyers must exercise caution and wait for the price to stabilize before considering any entry opportunities.
In summary, the formation of a pennant pattern is a positive signal for buyers, indicating that the Bitcoin price is likely to continue its prior recovery. The potential breakout from the resistance trendline will intensify the buying pressure, pushing the price towards the next significant barrier. However, buyers must always exercise caution, as a bearish breakdown could offset the bullish thesis.
