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 channel. 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 first sign of an upside breakout is on an advance above the most recent short-term daily swing high of $7,689 from two weeks ago, with confirmation of strength seen on a decisive move above $7,870.10. Note that the 55-day EMA, seen in the chart below, is also marking resistance of the current consolidation bottom along with a trendline. Also, there is a bullish divergence in the 14-day relative strength index (RSI).
Bullish Viewpoint
Bullish ViewpointEven 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.
Bearish Viewpoint
Bearish ViewpointOn 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.
InterAnalyst has been serving over 500,000 investors globally since 1990. Authoring hundreds of financial articles, publications, and almost a million buy and sell trading charts. Mr. Nespoli’s Premier Bull & Bear blog is been read by more than 500,000 investors globally.