Bitcoin bullish reversal sets BTC on a return to $61,000

Bitcoin price is on a roll, pushing new seven-day highs and wiping out the past six days of losses. While BTC is not out of the woods yet, substantial buying pressure is occurring, and many bears attempting to front-run a head-and-shoulders pattern with early short positions have yet to cover.

Bitcoin price on deck to return to the $60,000 value area, but near-term resistance must break first

Bitcoin price may be starting 2022 with a nasty bear trap in the form of a head-and-shoulders pattern. In technical analysis, head-and-shoulders patterns are statistically the most recognizable and profitable chart patterns. Unfortunately, however, they are also the most rejected chart patterns. And the more obvious the head-and-shoulders pattern, the more likely it is to get rejected.

The current Bitcoin price action may be creating one of many great examples of why very obvious head-and-shoulders patterns turn into bear traps. Last week’s close below the neckline confirmed the head-and-shoulders pattern and bears attempted to follow through with more selling, but it appears buyers have stepped in.

BTC/USD Daily Ichimoku Chart

Bitcoin price needs to close above the weekly Ichimoku Cloud at $43,450 to confirm rejection of the head-and-shoulders pattern. Above that, buyers need to position Bitcoin at a level that would generate a continuation of the bull market. A close at or above $47,000 would return Bitcoin above the Volume Point Of Control, the weekly Kijun-Sen, and it would return the Chikou Span into open space. From there, Bitcoin will have a very wide-open path to test the next primary resistance level at $61,000.