Bitcoin price broke higher as it was rejected (once again) from the $10k level. The move higher came in the context of Square announcing a $50 million investment in Bitcoin, news that ignited more buying.
The USD also traded with a weak tone for the entire previous trading week. It means that the stock market moved higher, the EURUSD as well, the GBPUSD regained the 1.30 level, and so on. Inevitably, Bitcoin price broke above $11,000 as the USD decline generalized.
The big question here for the price of Bitcoin is – what comes next? Will it decouple from the USD? For example, if the USD appreciates this week, Bitcoin price should come back to the “equilibrium” level of $10k.
What is interesting about Bitcoin is that every exciting news comes from the bullish side. It is not the first time when a company decides to invest in Bitcoin, but the size of the investment is still small enough to matter in the grand scheme of things. Until institutional investors (e.g., endowments) pile in, Bitcoin will likely depend on the faith of the USD.
Bitcoin Price Technical Analysis
The chart below offers a trading opportunity for both bulls and bears. Bulls get excited as the market regained the $11k level and now forms a possible pennant formation. If we use the measured move for the pennant and project it to the upside, the price of Bitcoin has the chance to make a new high for the year.
However, bears also have an opportunity here. If anything, a bearish argument may be that the Bitcoin price simply corrects in the right shoulder of a bearish head and shoulders formation.
Both bulls and bears better wait for the price to break either to the upside, or the downside, before going long or short. The highlighted areas act as possible entries, with a stop at the opposite line and a risk-reward ration of minimum 1:2.