The rising wedge pattern on BTC/USD is a bearish reversal formation that typically occurs during an uptrend. It’s characterized by two converging trendlines, both sloping upward, with the upper trendline being steeper than the lower one. As the price moves within this narrowing range, trading volume often decreases, signaling weakening buying interest ¹.
In the context of BTC/USD, a rising wedge breakdown could trigger a significant correction, with a potential downside target near $90,765, representing a 14% decline from current levels ². The Relative Strength Index (RSI) remaining elevated near 64 also suggests overbought conditions, which may amplify selling pressure if bears take control ².
To trade this pattern, consider the following steps:
– Identification: Confirm the presence of a rising wedge pattern by drawing trendlines connecting the highs and lows.
– Confirmation: Wait for a breakdown below the lower trendline, accompanied by an increase in volume.
– Entry Point: Consider entering a short position once the price convincingly breaks below the lower trendline.
– Stop-Loss: Place a stop-loss order above the upper trendline or a recent swing high to manage risk.
– Target: Estimate the potential downside target by measuring the height of the back of the wedge and projecting it downward from the breakout point