The Bitcoin price was stuck in a tight range on Thursday as the recent bull run came to an end and buyers remained on the sidelines. BTC was trading at $118,745, a range it has remained in the past few days. This article explains why the coin is likely to rebound after forming a bullish pattern and as the Fear and Greed Index rallies.
Bitcoin Price Chart Pattern Signals a Rebound is Coming
The daily chart shows that the BTC price made a strong bullish breakout earlier this month, jumping to a record high of $123,200. This rebound happened as it moved above the upper side of the inverse head-and-shoulders pattern, one of the most bullish patterns in technical analysis.
Bitcoin price now remains above the 50-day and 200-day moving averages, which have provided it with substantial support. At the same time, Bitcoin is slowly forming the highly popular bullish flag pattern. This pattern consists of a vertical line and a flag-like pattern, which is currently in effect.
Most importantly, the ongoing consolidation has contributed to mean reversion, a phenomenon where an asset returns to its historical averages. In this case, the spread between the current price and the 50-day moving average has continued to narrow.
The Average Directional Index (ADX) has continued to move downwards, indicating that its volatility has decreased. Therefore, the most likely scenario is where the Bitcoin price bounces back and possibly hits the next key resistance point at $125,000 in the near term.
The bullish Bitcoin price forecast will become invalidated if it crashes below the support at $110,000. A drop below that level will be a sign that there are enough bears in the market.
READ MORE: XLM and XRP Price Analysis: Why Ripple, Stellar Crypto are Crashing
Fear and Greed Index Points to Risk-On Sentiment
The main catalyst for the Bitcoin price is the ongoing risk-on sentiment in the financial market. The gauge tracked by CNN Money showed that the index has moved into the extreme greed zone, at 76.
Key sub-indices, such as stock price strength and breadth, put and call options, safe haven demand, and junk bond demand, have all moved to the extreme greed zone.
A good example of the ongoing risk-on sentiment is the meme stock mania that has pushed stocks like Opendoor, GoPro, iRobot, Sleep Number, and Ocugen to surge by double digits.
The Crypto Fear and Greed Index has also moved into the greed zone, at 70. In most cases, Bitcoin thrives when the index has jumped to the greed area.
READ MORE: Here’s Why Metaplanet Stock Price Has Crashed as Bitcoin Surged
