“According to the first law of physics, a body in motion will continue to move until an external force acts on it,” wrote Wall Street trader Martin S. (Buzzy) Schwartz in his book Bulldog.
Bitcoin rose nearly 50% in the first seven weeks of this year to hit a six-month high of $24,900, largely supported by external forces such as traditional market sentiment. U.S. Treasury yields have risen recently as the cryptocurrency market and Wall Street’s tech-heavy Nasdaq have been resilient to the actions of the Federal Reserve (Fed). .
As a result, one chartist expects prices to continue higher, with bitcoin more than doubling in value in the coming months.
William Noble, director of research at Emerging Assets Group and former Goldman Sachs analyst at Morgan Stanley, commented:
“Bitcoin is breaking out of a long-term base. As the saying goes, the bigger the base, the higher the price. Bitcoin may turn from a consolidation to another parabola, back to $56,000.”
Noble correctly predicted a price increase from $20,000 to $40,000 at the end of the 2020 bull run.
“Parabolic” is a phrase commonly used in the cryptocurrency market to describe a strong move that is expected to move higher with limited losses.
Source: Tradingview
Bitcoin’s recent recovery moves come after a deep, prolonged sideways bear market around $18,000, or what Noble calls a fundamental pattern.
The relative strength index (RSI) turned bullish on the weekly chart, confirming the end of the downtrend.
RSI bullish divergence occurs when the indicator fails to react to new lows as it did in November 2022. This shows that the bears are losing strength while the bulls are gaining momentum.
banner the cow via Nasdaq
Another piece of good news for cryptocurrency bulls is that the Nasdaq has broken out of a bull flag — a technical pattern known to accelerate an uptrend. The 90-day correlation between Bitcoin and Nasdaq has increased to 0.75, suggesting that the two assets are moving in tandem.
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“On the Nasdaq chart, there’s a bull flag. The stock market could have another big rally to new all-time highs,” Noble said.
Source: Tradingview
A bullish flag forms when there is a correction following an initial steep rally. The final breakout of the flag is said to confirm the resumption of the broader uptrend.
The Nasdaq lost 37% in the 11 months through October 2022. Although severe, the decline looks like a correction of a broader recovery from the March 2020 low and represents a flag pattern on the weekly chart that recently ended in a bullish breakout.
“In other words, there could be a new bull market in stocks just like the previous ones. 2023 could be a surprisingly good year for cryptocurrencies and stocks.
Interestingly, as analyst Declan Fallon pointed out, the daily chart of the Nasdaq also shows a bull flag breakout.
Potential breakout on ETH chart
Source: Tradingview
ETH, the second-largest cryptocurrency by market capitalization, has yet to break out of the expanding triangle defined by the trendline connecting the highs on Jan. 21, Feb. 2 and the lows recorded on Jan. 25, Feb. 13.
According to Noble, the potential breakthrough could be overwhelming for ethereum’s native token.
“The expanding triangle on the ETH chart has very high upside potential. I saw this pattern in 2009 and 2010 when the stock market recovered from the global financial crisis,” Noble said, referring to the S&P 500’s The 2009 expanding triangle breakout.
Source: Tradingview
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