2025’s start won’t be a prosperous one for the cryptocurrency market, as it seems. Initially, the price of Bitcoin (BTC) hinted at a fresh record-breaking height, but instead, it produced a higher low compared to its December peak, creating what some experts interpret as a head and shoulders pattern.
Among widely used technical analysis patterns, the head and shoulders formation stands out. It’s recognizable by a sequence of three upward movements, where the central and tallest peak is referred to as the ‘head’.
Yet, the shoulders don’t manage to hit the central peak, suggesting a lack of strength among buyers at present. The pattern is concerning because once the second shoulder is established, there’s a risk that the asset’s price could plummet below the neckline and drop by an amount equal to the height of the head.
Three scenarios for Bitcoin (BTC) by Peter Brandt
Based on Peter Brandt’s recent analysis as a seasoned trader with half a century of experience, Bitcoin appears to be forming a classic head-and-shoulders chart pattern. If this pattern holds, the potential prices for BTC could range from three different scenarios starting from its current position. The first possibility, suggested by the analyst, is that the pattern completes and the price might drop towards an approximate target of $76,000 – a level 18% lower than its current price.
In Brandt’s view, the second situation presents an optimistic outlook where the Bitcoin price could create what is known as a “bear trap.” This market manipulation technique works by causing the price to drop, encouraging everyone to become pessimistic (bears). However, after this pessimism sets in, there’s a sudden upward surge due to a short squeeze. Previously, Brandt had pointed out this possibility as the most plausible.
This particular pattern is an example of a well-known Head and Shoulders (H&S) formation in Bitcoin (BTC). An H&S pattern can take one of three possible paths:
1. It may reach its target after completing the formation.
2. It could potentially be a false signal, known as a bear trap.
3. The pattern might evolve into a larger formation.What are your thoughts on this?
— Peter Brandt (@PeterLBrandt) January 12, 2025
In the third situation, the size of the head and shoulder formation might increase, but this doesn’t automatically imply that it will become more optimistic (bullish) or pessimistic (bearish).
Regarding Brandt, it’s important to remember that patterns aren’t inflexible. The trader points out that these patterns can indeed be effective, but they may also evolve or prove unsuccessful.
The future direction of Bitcoin’s price is uncertain, and the difficulty that seasoned traders like Brandt have in predicting its current market status underscores this uncertainty.
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2025-01-13 14:00