Bitcoin price forecast: Break and retest points to more gains

on Dec 28, 2021
  • Bitcoin has been in a strong rally in the past few days.
  • The rally paused in the overnight session leading to a pullback.
  • A break and retest pattern could see it keep rising soon.

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The Bitcoin price (BTC/USD) rebound paused in the overnight session as sentiment in the market continued. The pair rose to above $51,000, which was about 22.50% above the lowest level in December. It then retreated and is currently trading at about $49,500. Still, the price is about 25% below its all-time high.

Improving sentiment

Bitcoin has had a rough past few months. After approaching the key resistance level at $70,000 in November, the price crashed to a multi-month low of about $42,000. Recently, however, the price has crawled back and risen above the lowest level in December.

The ongoing rally is mostly because sentiment in the market has improved as investors downplay the impacts of the Federal Reserve and the Omicron variant. Indeed, stocks have surged, with the S&P 500 index soaring to an all-time high. The price of crude oil and other cryptocurrencies has been in a bullish trend.

Recent reports have pointed to the fact that the Omicron variant has mild symptoms and most patients don’t have a need for hospitalization. In South Africa, the number of Covid-19 cases has even started to decline. Therefore, this news has pushed more people to believe that the economic recovery will continue as more people get natural immunity.

Meanwhile, the BTC/USD pair has rallied as investors watch the ongoing improving financial metrics. Recent on-chain data shows that the number of transactions has continued rising in the past few months.

At the same time, the mining difficulty of Bitcoin has continued rising, signalling that there is still demand for the coins. Another catalyst is that investors who sold Bitcoin for tax-loss harvesting purposes have started to buy it back.

Looking ahead, there will be no major Bitcoin-related news today since most investors have taken a week off to prepare for the coming year.

BTC/USD forecast

Bitcoin Price

The four-hour chart shows that the BTC/USD pair formed a strong support at about 46,000 in December. A closer look at this pattern shows that it is similar to what happened in July when the coin bottomed. It has also moved above the neckline of the small inverted head and shoulders pattern that formed in December. Most importantly, it has retested this level, in what is known as a break and retest pattern.

Therefore, there is a likelihood that the Bitcoin price will continue rising as bulls target the key resistance level at 53,000.


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