According to Cointelegraph, Bitcoin (BTC) has confirmed a breakout from an inverted head-and-shoulders pattern, a reliable reversal indicator, suggesting a potential upward movement towards $160,000. This pattern has emerged on both the 3-day and weekly BTC/USD charts, with a recent breakout above the neckline resistance near $113,000. This development opens the possibility for Bitcoin to reach at least $140,000, as noted by chartist Merlijn the Trader. Meanwhile, analyst Trader Tardigrade anticipates an even higher target of $160,000, based on a slightly ascended pattern on the weekly chart.
Bitcoin recently reached a record high near $123,250 but has since cooled off, experiencing a 5.65% decline in what appears to be an overbought correction. This pullback follows a period of strong gains, with the daily relative strength index (RSI) crossing 70, indicating short-term exhaustion among traders. On-chain data suggests that profit-taking by large holders, including both long-term investors and short-term speculators, has contributed to the downward pressure. Analyst Hardy suggests that Bitcoin may revisit the CME gap between $114,300 and $115,600 to establish this area as new support before continuing its upward trajectory. This region aligns closely with the neckline of the inverted head-and-shoulders pattern, a common behavior where prices return to the breakout zone to solidify support before resuming their trend.
Despite trading near all-time highs, Bitcoin's MVRV Z-Score remains well below levels historically associated with market tops, indicating that the current rally may still have room to grow. The MVRV Z-Score measures the deviation of Bitcoin's market value from its realized value, serving as a proxy for the capital invested in the network. Historically, when the market value significantly exceeds the realized value, the score enters the red zone, signaling overvaluation and often preceding major tops. However, the current divergence suggests that Bitcoin is not yet overheated from an on-chain perspective and may continue its ascent, potentially reaching the $160,000 target by August or September. This article does not provide investment advice or recommendations. Every investment and trading decision involves risk, and readers should conduct their own research before making any decisions.
