Bitcoin price has formed higher highs and higher lows to consolidate inside a rising wedge formation. Price is nearing the peak of the pattern to signal that a breakout could be due soon.

The 100 SMA is above the longer-term 200 SMA to hint that the path of least resistance is to the upside or that a break higher is more likely to happen. If that happens, the price could head higher by the same height as the wedge formation, which spans $4,800 to around $5,350.

The 100 SMA also lines up with the bottom of the wedge to add to its strength as support in the event of another dip. However, if price manages to break below the $5,200 floor, it could be in for a drop that’s the same height as the wedge.

Stochastic is heading lower from the overbought zone to signal that selling pressure is building up. The oscillator has plenty of room to go before hitting the oversold region, which suggests that sellers could stay in the game for a bit longer. However, ADX is below the 20 level to reflect consolidation.

Bitcoin enjoyed a strong rally that took it past several key resistance levels that led more buyers to join in. It will depend on the next few days to indicate if this rally has any legs or if another round of profit-taking is due, which is something that has been happening as the middle of the month rolls along.

There has been word of strong volumes returning to bitcoin, particularly among Chinese investors. If these volumes are indeed sustained, it could provide enough momentum for another longer-term upside move until the next resistance levels near $6,000. On the other hand, a significant retracement might follow and take price back to the $4,000 area of interest.

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