BTC completed an inverted head and shoulders (H&S) bullish pattern after breaking above the neckline on Thursday.
Normally, after the breakout of a pattern, the price falls back to test the breakout level. If the BTC/USDT pair bounces off the neckline, it indicates that the bulls have turned the level into support. This increases the likelihood that the bullish trend will continue toward the pattern target of $150,000.
The first sign of weakness will be a breakout and close below the neckline. This indicates profit-taking at higher levels. Bears will need to push the price below the 50-day simple moving average (SMA) (USD 106,981) to take the lead.
The price surged sharply from $110,530 and broke above the neckline. This bullish move has pushed the relative strength index (RSI) into the overbought zone on the four-hour chart. This increases the possibility of a correction or consolidation in the short term. If the price holds above the neckline, the bullish trend could reach $123,000.
This optimistic outlook will be nullified in the short term if the price drops sharply and falls below the support of $110,530.