In case you missed it, an improvement in risk appetite earlier this week took Bitcoin (BTC/USD) from its sub-$20K lows to back above the $25K inflection point that served as resistance in February.
In fact, BTC/USD even hit the $26K mark – a nine-month high – before the sellers took over!
BTC/USD hasn’t made new highs since then.
Bitcoin (BTCUSD) 1-Hour Chart by TradingView
Is the OG crypto in for a reversal?
I’m looking at the Head and Shoulders pattern that showed up on the 1-hour time frame.
A break below the pattern’s “neckline” could take BTC/USD down by the same height as the pattern. In this case, this means a trip to the $23K or $22K psychological levels.
Of course, future price action will depend on market sentiment for the rest of the week.
All eyes will be on European and U.S. banks as local regulators step in to limit depositor concerns.
And then there’s today’s European Central Bank (ECB) policy announcement. If ECB President Lagarde and her team sound less hawkish than they were last week, then more traders will price in a less hawkish tightening plan from the Fed.
Risk appetite could return and BTC/USD could bounce from its current levels to retest its $25K or $26K highs.
But if contagion fears continue to spook risk-takers, then BTC/USD could break below the Head and Shoulders neckline and retest areas of interest like $22,500 or $21,500.
What do you think? Is BTC/USD’s upswing from below the $20K a bull trap? Or are we seeing the start of a longer-term reversal?
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