The bitcoin chart is showing signs of resuming long term trend back to $66K as ETF decision looms

Here's a breakdown of the bitcoin chart and what to watch for to confirm that the cryptocurrency is resuming its long term trend back to all time highs. If you haven't heard, bitcoin was up substantially in 2023, and a full fledged ETF may finally get approved by the SEC. Some experts claim that could be a clear sell the news event if/when it happens, while others believe it will prompt an even bigger rally.

Either is possible, but right now it's important to recognize that BTC's price action has been working well over the last number of weeks and months. And if the biggest cryptocurrency is going to keep advancing, here's what will need to happen next. First, let's look at the short term picture.

While bitcoin bottomed in September 2023, it got really interesting in October, when it broke above a two month bullish pattern before settling in the mid $30,000s for a few weeks. As a result, its 14 Day relative strength indicator (RSI), which measures momentum, got very stretched, nearly hitting 90 (70 is considered overbought).

A quick glimpse of BTC's chart shows that the last five months have been peppered with additional breakouts and overbought readings. However, it's what happened in between those spikes that really mattered: Each big advance was followed by long periods of consolidation, which have only set the stage for additional breakouts.

While its RSI isn't overbought again now, the indicator has continued to oscillate between the mid point (near 50) and the 70 level, which is the epitome of an uptrend. Bigger picture, this is the most important chart pattern we're watching right now. That October 2023 up move also completed a 17 month bottoming formation, which we see here below in log scale.

Pattern targets can be configured using a measured move strategy. And with log charts, that means applying the percent move of the base to the breakout zone. For bitcoin, that gets us to a target near $66,500, which is right in line with its former, all time highs. This doesn't have to be achieved right away, of course.

Seeing some backing and filling anywhere above the breakout zone could help digest some of this already strong move. Zooming even further out, last year's bounce allowed bitcoin to maintain the same uptrend line it's been riding for years. We know all about the gargantuan drawdowns BTC has endured in its history, but all along it has done two very important things make higher lows and make higher highs.

In other words, each of its biggest extensions have taken it to new highs. Therefore, if this recent up leg simply maintains the same traits as the rallies from prior years, then BTC once again could approach new highs. Tracking how well bitcoin digests each prospective breakout and how its 14 Day RSI reacts along the way will continue to give us clues going forward.

Frank Cappelleri Founder: https://cappthesis.com DISCLOSURES: (Owns shares in the GBTC Bitcoin Trust in personal account.) THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET.

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