Bitcoin Holds Support For Wealth Maximizer Traders

Volatility in bitcoin (BTC/USD) has fallen noticeably in the past six weeks as the pair has been range bound around a key price support zone. Low volatility usually leads to higher volatility, and given the price pattern, bitcoin is poised to move soon.

For the past six weeks or so, bitcoin has been consolidating around the bottom line support of a descending trend c hannel. This follows the completion of a 61.8% Fibonacci retracement of the 2019 rally, as the pair fell through $7,231.40 seven weeks ago before reaching $6,430 and holding. That low completed a 53.6% decline off the 2019 top and remains the most recent trend low.

The top of the range or resistance of the six-week consolidation is at $7,870.10, which is right around the bottom of the 55-week exponential moving average (EMA) orange line, now at $7,805.60. In addition, the long-term uptrend line has so far provided some support around the recent lows as well. Although it may not be done forming, so far this pattern can be looked at as a possible double bottom trend reversal pattern, as of now.

Although it’s not clear what happens next, bitcoin does seem to be getting closer to making a move in one direction or the other.

Even with the 53.1% retracement, bitcoin ended 2019 up 94.1%. In an upside breakout scenario, not only is a move up to the top channel line possible, but bitcoin also has a chance to break out of the declining trend channel. The falling channel is part of a potential trend continuation pattern that has formed subsequent to the 2019 top of $13.868.44. That top ended an aggressive 28-week 343.2% advance off the December 2018 bear market low of $3,128.89 and can be considered as the first leg up off a bottom.

On the downside, a decisive drop below $6,430 triggers a continuation of the bearish channel, and given that a break below the long-term uptrend line would therefore occur, selling pressure could accelerate. The next lower key support zone is identified as $5,900 to $5,427, given prior price support levels around $5,900 and the 78.6% Fibonacci retracement at $5,427.15.

Bitcoin Holds Support For Wealth Maximizer Traders