Technical Analysis and Market Entry: Bitcoin Demonstrating Growing Vulnerabilities of An Imminent Drop
- BTC/USD price action is consolidating following the surge higher late in October.
- The price has been narrowing for the last twelve days, ahead of the next committed move.
BTC/USD Recent Behaviour
The Bitcoin price is very much stuck within consolidation mode, which has been observed since the back end of October. BTC/USD have attempted to stabilize above the $9000 mark, within the past days. It follows a surprising 40% surge between 25 – 26 October, the price had jumped from $7400 up to a short-lived high of $10,400.
It came as a surprise because Bitcoin had been stuck within a stubborn bear market. The price between 15 August – 23 September, had formed a bearish pennant structure. The bears managed to capitalize on this, inviting a fresh wave of selling pressure.
Furthermore, from 25 September – 22 October, another pennant was constructed. The price breached the pattern, force a strong drop; however, it was short-lived. The big bull action, as noted above, came into play, proving it to be somewhat of a technical fakeout. A move which was also somewhat exacerbated by the narrowing range breakout, trading conditions had been tight for such a long period.
Weekly Chart View
BTC/USD had run into a chunky area of supply, which runs from $9200 up to $10,000. The price had not traded above here since 23 September, when a bear market kicked back into gear. Bullish momentum has failed to pick up pace via the weekly chart view, following that huge week which commenced on 21 October.
Daily Chart View
Price action via the daily chart view is testing a critical ascending trend line of support, tracking at $9200. It should also be noted as a daily level of comfort; a breach could very likely spark much panic selling. Aside from the supply as mentioned above, in proximity is the 38.2% Fibonacci causing some problems for upside. The narrowing range seen of late is a growing case for an explosive breakout, which at present appears to be tilted to the downside.
Given the continued testing from the bears on the critical ascending trend line and a daily support at $9200, another fall lookings increasingly likely. Downside targets of interest seen at $8650, $7850 and then $7500. An entry around the current market price stops placed $10,000.
Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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