This year has been a strong period for bitcoin bulls, as the price of the digital currency has climbed to levels not seen in more than two years.
Now, a technical trading pattern commonly used by equity analysts has emerged on the digital currency’s chart—and it suggests that prices are poised to shoot even higher.
The pattern, known as a pennant, or flag, can be seen in the below chart as a converging triangle, which was initially published on Sober Look:
A so-called pennant formation suggests that a long-term trend in the price of a given asset is about to resume after a brief period of consolidation, according to Jonathan Krinsky, chief market technician at MKM Partners.
In this case, the read would be that bitcoin prices will soon take out their 2016 high—around $764 a coin, according to CoinDesk—reached on June 19.
Bitcoin prices have risen sharply since late 2015 as record-low bond yields and worries about faltering global growth have forced investors to seek alternatives to bonds and stocks. Some have attributed the price rise to a quadrennial phenomenon known as the halving, which happened on Saturday, that reduced the rate at which new bitcoins are created by half. Though it has had little impact so far, some believe prices could rise further as the market adjusts to the newly restricted supply.
Read: Why bitcoin’s price could be poised to shoot higher
But if you intend to trade based on the pattern, Krinsky said investors should act fast. A generally accepted rule of technical analysis is you want to see the break higher, or lower, no more than two-thirds of the way to the pattern’s apex—or the point when the two sloping lines would cross.
“We’re pretty much at that point where it should break out,” Krinsky said.
To achieve a confirmation of this breakout, prices need to move to the $775 to $780 area, Krinsky said. One coin was recently trading at $649, according to CoinDesk’s bitcoin price index.