After threatening to break out on Monday, Tuesday marked the day when Bitcoin finally broke out of an 8-week downtrend. If the BTC price can sustain its position above the downtrend line on Wednesday, it will achieve a daily confirmation of this breakout. This development raises the question: could this be the signal that the bull run is about to recommence?
Fed Chair Powell's Comments Are Key
A further rate cut is anticipated to be announced at the Federal Reserve FOMC meeting later today. Another 25 basis points rate cut, following similar cuts in September and October, is likely to stimulate the economy and create a favorable environment for risk assets such as Bitcoin.
However, the FOMC meeting on Wednesday may not be entirely smooth. Fed Chairman Powell is scheduled to make comments following the announcement. If he signals a more hawkish outlook regarding the possibility of rate cuts early next year, the market is likely to react negatively. Bitcoin is expected to experience significant volatility before, during, and after Powell's comments and his responses to press inquiries.
BTC Traverses Within a Bear Flag
Analyzing BTC in the short-term timeframe, the current breakout appears to be robust so far. Naturally, given the potential for high volatility, there remains a possibility that the price could be pulled back below the downtrend line. Nevertheless, such a move, if it were to occur, would likely be temporary.
The primary pattern currently observed for the price is an ascending channel. It is important to recognize that, regardless of its appearance, this is a bear flag. Bear flags are inherently bearish, and most such patterns ultimately break to the downside.
However, with the BTC price potentially having just broken out of a downtrend and also emerging from a significant falling wedge pattern, there is a good chance that this bear flag could be exited from the top, which would be an exceptionally bullish outcome.
Despite these observations, there is a considerable probability that the BTC price will retrace during the day to test, and either confirm or reject, the breakout.
BTC Breaks Out of a Huge Falling Wedge
The daily timeframe reveals the emergence of the BTC price from a massive falling wedge pattern for the first time. This development could indeed mark the beginning of an upward trajectory that could propel BTC all the way back to the upper major trendline and a new all-time high.
Nevertheless, there is still ground to cover before the bulls can confidently declare the downtrend definitively reversed. This would require reaching $107,500, where a higher high would be established.
The immediate priorities for the bulls, once the FOMC proceedings are concluded, involve breaking through the $94,000 horizontal resistance level and the upper boundary of the bear flag. Successfully doing so would then clear the path to the next significant horizontal resistance at $101,000.
Cross-Up from the Bottom for 2-Week Stochastic RSI
The weekly chart presents an overwhelmingly bullish picture, making the prevailing bearish sentiment in the market difficult to comprehend. The Fear and Greed Index is only just beginning to emerge from the "Extreme Fear" segment, and investors are largely anticipating further declines in the BTC price. However, the chart itself suggests a different narrative.
It must be acknowledged that there is still a possibility that this breakout could turn out to be a fakeout by the end of Wednesday. However, even if this occurs, it is highly probable that the new candle forming next week will print on the other side of the downtrend line.
Furthermore, a glance at the bottom of the chart reveals the Stochastic RSI. This is a 2-week chart, and for the blue fast line to cross above the red slow line from the bottom is of paramount importance. This event occurs approximately once a year and, as the chart illustrates, typically precedes a substantial upward move.
This is not the time to be swayed by the prevailing sentiment on social media.