• A technical analyst stated that the formation of an inverse head-and-shoulders pattern on the Grayscale Bitcoin Trust shares (GBTC) could indicate a potential bullish trend reversal.
• A close above the neckline would confirm the reversal, potentially leading to a 50% price rally.
• The reverse head-and-shoulders structure is identified by three price troughs formed along a resistance line, with the middle trough being the lowest and the other two relatively smaller and similar in depth.
Grayscale Bitcoin Trust Form Bullish Chart Pattern
The future looks bright for the battered Grayscale Bitcoin Trust shares (GBTC), a technical analyst told CoinDesk, pointing to an inverse or reverse head-and-shoulders pattern on GBTC’s price chart. GBTC jumped to a six-month high of $13.54 Wednesday, testing the neckline resistance of the reverse head-and-shoulders pattern on the daily chart.
Reverse Head-and-Shoulders Pattern
The reverse head-and-shoulders structure is identified by three price troughs formed along a resistance line, with the middle trough being the lowest and the other two relatively smaller and similar in depth. The occurrence of this pattern after a prolonged and notable downtrend, as in GBTC’s case, is said to signal a potential bullish trend reversal. The bullish shift is confirmed once prices top out above this common resistance line – referred to as „neckline“ – by technical analysts.
Confirmation of Breakout
A close above this neckline will confirm breakout from this formation which could then open up doors for further gains according to Goncalo Moreira, author of VocabTA; he added that it could lead to almost 50% rise in prices from current levels if it confirms as expected.
If GBTC manages to close its daily candle above $13 mark than it would mean confirmation of this bull run which could lead to significant increase in prices compared to current levels – especially considering that these have been at significant lows since mid 2020 when prices had crossed all time highs back then crossing $20 mark per share.
In conclusion, if confirmed technically this reversal structure can result in significant gains for holders and investors in GBTC shares who are already awaiting any kind of positive news for some time now due to ongoing bear market conditions since mid 2020 highs seen at around $20 per share level.