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Bitcoin, the bellwether cryptocurrency, appears to be in the process of forming an inverse head and shoulders (iHS) pattern.
Bitcoin is currently changing hands at $111,491, CoinGecko data shows. The cryptocurrency has dipped by 2% over the past 24 hours.
Potential bullish reversal
This is a bullish reversal pattern, which typically signals the start of a new uptrend. It is characterized by a "head" being flanked by two "shoulders." The left shoulder is near $110,500, while the left shoulder mirrors it around the same price zone. The head of the pattern is $108,000, which marks Bitcoin's local low that was recorded on Aug. 26.
On the one-hour chart shared by prominent trader Josh Olszewicz, the "neckline" is located around the $112,500 level. This is the horizontal resistance that needs to be crossed for Bitcoin's rally to resume. If Bitcoin manages to pull off a convincing breakout above the neckline, it would confirm the uptrend.
It should be noted that the pattern in question could still end up failing if there is no clear breakout.
Facing "double top" pattern
As reported by U.Today, prominent trader Peter Brandt recently warned that Bitcoin was facing a double top pattern following its recent correction.
To avoid such a bearish setup, Bitcoin bulls would need to reclaim the make-or-break $117,570 level.
Earlier, Brandt claimed that there was a 30% chance that Bitcoin had reached its peak in August.
The lifetime high of the world's leading currently stands at $124,128, according to CoinGecko data. Bitcoin is currently down nearly 10% from that local peak.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team