Bitcoin (BTC) Hits Bull Flag Peak: Will a Dip Precede an Explosive Breakout?

Following very positive price action last week, the Bitcoin (BTC) price has hit the top of its bull flag. A rejection is quite likely to take place from here. That said, this could be the last down movement within the flag as Bitcoin may be readying for an explosive breakout. 

Bitcoin treasuries and U.S. Spot Bitcoin ETFs fervently purchasing

Bitcoin treasuries are continuing to buy, with Michael Saylor’s Strategy having just announced a 4,980 BTC purchase, bringing its total holdings to nearly 600,000 BTC, at a cost basis of nearly $71,000 per Bitcoin.

Last week, the U.S. Spot Bitcoin ETFs attracted a total inflow of just over 21,000 BTC, with the Blackrock IBIT ETF accounting for more than half of this.

The Japanese Bitcoin treasury company Metaplanet was the first to announce a purchase of Bitcoin on Monday as it acquired an additional 1,005 BTC, making it the 5th-largest public Bitcoin holder, putting it above Galaxy Digital and Cleanspark.

It’s into this rapid purchasing fervour that the Bitcoin price finds itself at the top of a bull flag and potentially not far from exploding skyward from the upper trendline.

$BTC rejection from top of bull flag

Source: TradingView

The short-term chart for $BTC shows how the price just touched the top of the bull flag. A rejection is taking place, and it just remains to be seen how deep this might go. The price is currently propped up by support at $107,600, but as the shorter term Stochastic RSIs come back down and reset the price could fall further, perhaps down to the major support at $106,000, or possibly even down as far as $104,000. Given that the 4-hour Stochastic RSI has already touched bottom, the $106,000 horizontal support could be more likely to be the extent of the dip.

Daily time frame shows potential dip incoming

Source: TradingView

The daily time frame reveals the magnitude of the bull flag. It can be seen that a rejection may have begun, but that a breakout to the upside still looks far more likely than one to the downside.  

At the bottom of the chart, the Stochastic RSI on this time frame has its indicators at the top, presaging a loss of price momentum. However, when these indicators cross down, they could be held up by the 80.00 level, or perhaps the 50.00 level, before crossing back up again.

The Relative Strength Index, right at the bottom of the chart, is showing that the indicator is angled downward. That said, if the indicator does come down and confirm the descending trendline before rising again, this would be a bullish event.

2-week time frame reveals price action on a knife edge

Source: TradingView

The 2-week chart for $BTC illustrates how things are currently on a knife edge. The price action in the main window of the chart shows how this next weekly close, which coincides with the 2-week close, really needs to be above the major $104,400 horizontal support. This would go a long way towards marking this level as a base for the next surge higher.

At the bottom of the chart, the Stochastic RSI indicators are in a very tight embrace. If the blue (fast) indicator line can be above the red (slow) line at the end of this week it will be bullish. Also, the MACD at the very bottom of the chart is showing its indicator lines entwined, while the histogram bars are continuing to be flat. Look for this indicator to signal one way or the other by the end of this week.

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.