The Chief Investment Officer at Build Asset Management, Matt Dines, has recently identified a classical ‘Cup and Handle’ pattern in the Bitcoin (BTC) price chart. This pattern is considered a strong bullish signal by market analysts and traders. The ‘Cup’ part of the pattern started forming in March 2022 when the price dipped below $48,000, leading to one of the longest Bitcoin bear markets. The pattern hit its lowest point at around $17,600, indicating a significant support level for Bitcoin. The left side of the pattern depicts a rounded bottom resembling a ‘cup,’ which occurs when the price initially drops, consolidates, and then begins to rise again. Since reaching this bottom, Bitcoin’s price has been on a steady recovery path, mirroring the right side of the cup and suggesting a bullish reversal from the previous downtrend.
Following the completion of the ‘Cup,’ the subsequent ‘Handle’ is formed by a moderate retracement after the recovery phase. This retracement creates a small dip or pullback from the peak, indicating the final consolidation before a breakout. The price drop to $38,600 at the end of January marked the bottom of this pullback. The breakout above $48,000 validated the cup and handle pattern in the Bitcoin price chart. Matt Dines also mentioned the placement of the vertical projection from the bottom of the handle, which plays a crucial role in setting the price target based on the pattern.
Dines explained that traders often use the height of the cup to set their price target. By adding this height to the bottom of the handle, traders can estimate where the longs who entered on the breakout might set their price target. In the case of Bitcoin, the height from the cup’s low to the resistance level is approximately $31,973. Projecting this height from the handle’s formation indicates a potential target around $75,000. However, Dines emphasized that the collective behavior of market participants will ultimately determine the price movement.
According to Dines, a lot of traders who entered long positions on the breakout might set a retrace at around $75k as they close out their positions. If a significant number of participants follow this strategy, it will shape the dominant price action and turn the projected chart into reality. Dines highlighted the importance of market participants in determining the actual price movements, emphasizing that their collective behavior plays a crucial role in market dynamics.
As of press time, Bitcoin was trading at $51,821. It is essential to note that the information provided in this article is for educational purposes only and does not represent the views or opinions of NewsBTC. Investing in cryptocurrencies carries risks, and individuals are advised to conduct their own research before making any investment decisions. It is recommended to use the information provided on this website cautiously and at your own risk.