Bitcoin forms bump-and-run reversal bottom, targeting $100,000

After surging above $26,500 following yesterday’s U.S. Consumer Price Index (CPI) release, Bitcoin saw the price undergo a sharp correction. BTC price briefly fell just below $24,000. At the time of writing, Bitcoin was trading at $24,868 below the key resistance at $25,200.

However, Charles Edwards, founder of Capriole Investments, has spotted an extremely bullish chart pattern for Bitcoin that could propel the price above $100,000. Edwards wrote on Twitter, “The textbook-perfect Bitcoin ‘bump & run reversal’ low is back and the target is above $100,000.”

Here is what Bitcoin bump and run reversal implies

The Bump And Run Reversal (BARR), as the name suggests, is a reversal pattern that occurs when excessive speculation drives prices down too far and too fast, to the point of reaching extreme lows. The pattern developed by Thomas Bulkowski was also included in his book Encyclopedia of Chart Patterns.

The pattern consists of three main phases: the lead-in, the hump, and the uphill run. As Edwards shows in the chart below, bitcoin price has formed the lead-in phase on the 3-day chart from November 2021 to May 2022, which begins with a series of descending spikes that are authoritative for the incipient trendline.

Bitcoin BARR Pattern | Source Twitter @caprioleio

The bump phase begins with a sharp decline, with the price moving further away from the trend line. This phase began for bitcoin in June 2022 when the price experienced a sharp decline before more bumps occurred, propelling the price to new extreme lows.

At the end of the bump phase, BTC experienced a strong uptrend in January 2023, causing the price to break the trend line.

Both mid-February and yesterday saw a fallback to the trendline where BTC price bounced higher. With this, Bitcoin has confirmed the start of the uphill run phase that begins when the pattern is broken. According to Edwards, this phase could take Bitcoin to over $100,000 by mid-2024.

More bullish chart patterns

The founder of Capriole Investments also found two other reasons to be bullish in the short to medium term. Edwards shared the following two charts and said via Twitter:

Head & Shoulders and Wyckoff Accumulation at last resistance level before $30,000. Close above $25 this week and it doesn’t get much better from an old-school technical perspective.

Head & Shoulders and Wyckoff Accumulation | Source: Twitter @caprioleio

For now, the $25,200 resistance remains the key level Bitcoin needs to break to build bullish momentum. Already in February, the price was rejected three times at the resistance. Yesterday’s breakout did not last, so it remains the limit for a new bull run to start.

BTC price below key resistance, 4 hour chart | Source: BTCUSD on TradingView.com

Featured image from iStock, chart from TradingView.com

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