Is Bitcoin Forming a Bull Flag? $90K Target Coming Into Play

What could be a bull flag is starting to form at the top of the amazing price surge that took place on Wednesday and into Friday of last week. Should this bull flag be confirmed and a breakout happens, $90K could be the eventual target. 

Bull flag forming?

Source: TradingView

Looking at the short-term time frame chart above, it can be seen that the $BTC price hit a local high of $79,500 before falling back quite sharply to $76,700. Since then the bulls have regrouped, and the pattern that is starting to emerge looks very much like a classic bull flag.

This type of pattern usually has the price going sideways and lower within the confines of a flag structure until there is a breakout, which would normally issue from the top of the pattern.

However, for a bull flag to be confirmed there would typically be at least three touches to the top of the flag, and three to the bottom. As can be noted, the price action is lacking in this requirement so far, although with some more sideways and downward chop the pattern can eventually be completed.

Something else to think about is that since the $BTC price hit that top, the retracement has only taken it back as far as the 0.236 Fibonacci level. This is the shallowest of all the Fibonacci levels, and if the price does bounce from here it would be very bullish indeed. That said, a correction to at least the 0.382 would probably be a more healthy one.

Confluence at $69K

Source: TradingView

Moving up into the daily time frame one can only gaze with awe at the size of the price increase once the $BTC price had arrived at the very end of the junction between the bear and bull market trendlines and had exploded upward.

So what happens now? Does a bull flag continue to take shape, or could the price fall all the way back to $69K, where horizontal support awaits, plus the 0.618 Fibonacci level, and also a potential confirmation of the 200-day simple moving average. This is a lot of confluence, and like a magnet, this could draw the price back down for what would be a very healthy correction.

At the bottom of the chart, the Relative Strength Index (RSI) displays its indicator high up in overbought territory. The height attained here is greater than anything seen since the $BTC price first entered into its 8-month long bull flag in February 2024. One excellent result of this climb, as far as the bulls are concerned, is that the huge downward trend stretching back to November 2024 has potentially now been nullified.

Continuation or healthier pullback?

Source: TradingView

The macro time frame of the weekly shows us how important the current resistance at $78,600 is, and also the next resistance after that at one of the bear market highs at $82,750. Can the $BTC price get through this, or is a longer corrective period needed?

One thing is pretty sure in trading - a price cannot go up at such a pace indefinitely. The time comes when the buyers are exhausted, and that’s when the sellers step in.

It may be that the bull flag does continue to play out and there is a renewal of the upward thrust from Bitcoin. However, that may not be a healthy outcome, and if this happens, the correction, when it does come, could be a lot more violent.

Back to the RSI - in this weekly time frame it can be seen that the indicator line has broken through the downtrend. We need to wait until the end of this week to see if it holds above. If it does, stand by for more upside price action.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.