3 Reasons Why Bitcoin Could Test $30,000

Bitcoin (BTC) has risen to highest price in a month, experiencing a relief rally that has the potential to turn into something more substantial. Let’s explore 3 key technical factors that support the bullish case scenario, and if a potential retest of $30,000 is possible.

Bollinger Bands Hook

The hooking of the Bollinger Bands, when the 2 bands point in the opposite directions, is usually a signal of a significant move ahead. When the price crawls along the upper band, we can expect a sustained upward movement.

In the beginning of May and June, we had a similar signal, but at that time BTC’s price was crawling along the lower band, which led to lower prices.

What are Bollinger Bands Hook?

The Bollinger Bands hook is a technical indicator that can be used to identify potential reversal points in the market.

It is created by drawing two lines on a chart. The upper line is typically two standard deviations above the 20-day moving average, while the lower line is two standard deviations below the 20-day moving average.

When the price of an asset reaches the upper Bollinger Band, it is considered overbought, and when it reaches the lower Bollinger Band, it is considered oversold.

Read more about Bollinger Bands in our blog.

Stair Step Pattern Broken

Bitcoin is also attempting to reverse the stair step pattern that developed during the current bearish cycle. Basically, the stair step pattern develops along with the downtrend, because the price trades sideways for a few days before it breaks down.

The price range of the last consolidation can be used to project the next possible target. In our case, the measured move target could be completed around $28,500.

What is the Stair Step Pattern?

The "Stair Step" pattern is a three-step process that Bitcoin has followed since early 2019. The pattern goes as follows: First, there is a sharp decline in price, followed by a recovery to new highs, and finally, another decline to slightly lower lows.

RSI Oscillator

In terms of the momentum readings, the Relative Strength Index (RSI) oscillator has climbed to its highest reading since April and at the same time, we broke above the 50 mid-level – a positive price development.

Bitcoin’s price still has a mountain to climb, but once the $22,400 resistance level is cleared we have little to no resistance ahead. The next real resistance level only comes at the $28,000, the previous stair step bottom.

Looking forward, the $30,000 target is a big psychological level that Bitcoin has the potential to tag again if the bullish momentum continues.