Bitcoin is setting up to make a big move.
The king of cryptocurrencies started off 2023 with an explosive move higher, rallying from $17,000 to $28,000 in the first three months of the year.
Since then, though, the action has been lethargic.
Bitcoin has been chopping back and forth in a relatively tight trading range for the past several weeks. That consolidating action has built up a lot of energy in the chart.
Now, it looks like that energy is about to be released.
Take a look…
At first glance, this chart looks bullish.
After all, Bitcoin recently rallied above all of its various moving averages. And those moving averages have shifted into a bullish configuration with the 9-day EMA above the 20-day EMA, and the 20-day EMA above the 50-day MA. This setup often leads to at least a short-term rally.
The problem, though, is the intermediate-term setup looks a bit more bearish.
If you look closely at the chart, you can see the potential for a bearish head and shoulders pattern. The left shoulder is at the April high near $30,000. The head is at the July high near $32,000. And the current rally is building up the right shoulder.
There’s room for Bitcoin to move even higher over the next few weeks, and not invalidate this pattern.
So we could see a move to $30,000 or so as Bitcoin plays out the potential for a short-term rally.
Once that rally is done, though, things could get dicey.
The current setup in Bitcoin is eerily similar to how the chart looked at this time last year. Even the technical momentum indicator at the bottom of the chart looks the same.
Last year, Bitcoin rallied about 10% in October. But then it collapsed nearly 30% in November.
The current setup in Bitcoin is bullish for the very short term.
The king of cryptos could indeed rally 10% between now and Halloween. But the potential head and shoulders pattern could spell trouble after that. The indicated move for a breakdown of that pattern is closer to $20,000.
In other words, following a brief rally, Bitcoin could give up much of 2023’s gains in the final two months of the year.
Best regards and good trading,
Jeff Clark
Source: Jeff Clark Trader