Bitcoin price has formed a rare chart pattern that could push it significantly higher in the next few months.
Peter Brandt, a popular analyst with over 700,000 followers on X, noted that Bitcoin (BTC) had formed a bullish chart pattern. He pointed to the inverted right-angled broadening triangle, which was coined by Richard Schabacker in 1934.
This pattern, often described as the falling broadening wedge, typically leads to a strong bullish breakout over time.
It occurs when an asset forms two descending trendlines. In this case, the upper side of the wedge was formed by connecting the highest points in March, May, June, and July. The lower side connected the lowest levels in those months.
This pattern worked well before, notably in the first quarter of 2020 when the Covid-19 pandemic spread rapidly worldwide.
Additionally, Bitcoin has formed a hammer candlestick pattern, characterized by a long lower shadow and a small body.
For the right-angled broadening triangle to play out, Bitcoin needs to hold steady above the lower side of the hammer. A breakdown below that point will invalidate the pattern and lead to more downside.
Potential catalyst for Bitcoin
For the pattern to succeed, Bitcoin will need a major catalyst. Like in March 2020, this catalyst could come from the Federal Reserve.
In a recent note, Chicago Fed President Austan Goolsbee indicated that the Fed would ‘fix it’ if the economy spirals into a recession. Fixing it would involve interest rate cuts and potentially, quantitative easing.
