Could Strategy (STR) be gearing up for a bullish surge? Market watchers are pointing to a potential double bottom pattern forming on its price chart, a classic indicator that suggests a downtrend might be losing steam and a rally could be on the horizon.

Strategy’s Double Bottom Formation Could Signal Potential Bull Run

Let’s break down what a double bottom formation actually means. Essentially, it happens when a stock price hits a low point, bounces back up, then dips to around the same low again before finally breaking through a key resistance level, often referred to as the “neckline.”

Looking at Strategy’s stock, we can see this pattern possibly playing out. The price has twice found support around the $230 mark since late February. Meanwhile, the resistance, or ‘neckline,’ appears to be holding around $320.94, a level it touched in early March.

Experts in technical analysis are highlighting an interesting detail: the distance between these low points and the neckline is more than 35%, which typically strengthens the reliability of this formation. If STR manages to punch through that $320.94 resistance, traditional charting methods suggest we could see a potential climb towards $410.

Adding fuel to the bullish argument, STR has also recently broken free from a downtrend line that had been in place since its peak back in November at $543. This adds another layer of confidence to the potential for an upward move.

This potential double bottom for Strategy stock stands in stark contrast to a double top pattern that was observed in Bitcoin (BTC) earlier in the year. That double top acted as a warning sign, foreshadowing the crypto sell-off we recently witnessed.

When Bitcoin’s double top played out around February 24th, prices dipped below $91,000, confirming a shift towards a downtrend. The slide then intensified, with Bitcoin dropping as low as $76,800 last week. It’s worth noting that the Nasdaq, heavily influenced by tech companies, also experienced a similar downturn earlier this month.

According to studies by Chartered Market Technicians (CMTs), both double bottom and double top patterns are known for their relatively low failure rates. This means that when these patterns do lead to breakouts or breakdowns, they often signal the start of more prolonged price trends.

Given that Strategy is the largest publicly traded holder of Bitcoin, its stock is frequently viewed as a kind of stand-in for Bitcoin’s own price movements. Currently, the company is holding a substantial 499,096 BTC, which at current market prices is valued at approximately $41.5 billion.

So, if MSTR does indeed break out of this double bottom formation, it could be a significant signal. It might not only mean positive momentum for the stock itself, but potentially for Bitcoin and the wider cryptocurrency market as well.

*This is not investment advice.