Shortly after a sharp drop from the mid $14,000 to the lower $9,000s, bitcoin saw a strong bounce to the upper $11,000s. At the time of this article, bitcoin appears to be consolidating and is ready to make its next move:
Figure 1: BTC-USD, 1 Day Candles, Macro View
In the previous BTC market analysis
, we discussed the distribution trading range the market fell out of as it reached for lower support boundaries. Ultimately, it found support on the macro 50% retracement values near $10,000. Once it broke south of the trading range, the price fell sharply and with high volume:
Figure 2: BTC-USD, 15 Minute Candles, Current Support and Resistance Levels
After bouncing off the macro 50% values, the market rallied and ultimately tested the linear trendline shown in Figure 1. Now, after several failed attempts to break the linear trendline’s resistance, the market finds itself in a consolidation pattern where it decides where it will move next.
Figure 3: BTC-USD, 60 Minute Candles, Potential Bear Flag
One possibility to keep a close eye on is this potential, strong bear flag. After finding support on the macro 50%, the subsequent rally saw decreasing volume throughout the length of the movement. This sort of price action could potentially lead to a bearish continuation with a measure move between $4000 and $5000 — a price target of approximately $6,000 – $7,000. If a drop of this magnitude continues the downtrend, we can expect to find support on the 61% macro Fibonacci retracement values shown in Figure 1.
It’s important to note that bitcoin has a penchant for breaking upwards when all signs say “down,” so tread lightly and wait for confirmation of the move. Confirmation of the bear flag breakout would show a pretty obvious outlier in volume, combined with wide price spread.
- Bitcoin recently saw a steep drop in price where it ultimately found a local bottom in the low $9,000s.
- Since it bottomed out, it has seen a rally on decreasing volume which leaves the door open for a bearish continuation.
- If the bearish continuation continues, expect support on the 61% macro retracement values.
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This article originally appeared on Bitcoin Magazine .