Dear traders welcome to this edition of CoinSyncom’s Bitcoin analysis, today with a bearish triangle playing the main role. This time, we are analyzing a BTC/USD pair on the 1-hour BitMEX chart.
What you are going to see may well be the most profitable trading idea you are going to find. Therefore, without any further ado, let’s get straight on it.
Bitcoin triangle technical analysis
We all know that the falling triangle is (usually) a bearish formation. It is revealed by strong support at a fixed level and declining highs towards the end of the triangle. So, that is exactly what you will see in the 1-hour BTC/USD chart below.
OK, we can agree that the current support isn’t right on the money and that it is rising a bit. However, the decline inside the triangle is more than obvious. This occurrence is, in fact, normal considering the recent steep surge of Bitcoin’s price.
Nevertheless, we have a 50% decline according to the Fibonacci retracement. While this level sometimes stays strong for longer periods, this time the overall formation may overrule it. That is the moment when we shall see the price decline.
Keep in mind that the next support level at $8,500 coincides with the 61.8% from the latest peak on the Fibonacci retracement. This will be important a bit later. Keep reading…
The end of the triangle – the moment of indecision
What would Bitcoin technical analysis of the triangle pattern be without mentioning the trading volume? At least once.
Naturally, towards the end of any triangle, volume declines. That is the result of traders waiting for a breakout or break down, depending on the nature of the triangle formation. This bearish triangle of ours is no different.
It is visible that MACD readings also confirm the current indecision as it fluctuates around the neutral value. The situation with the RSI is no different. The relative strength index (RSI) doesn’t reveal any extremes since Bitcoin isn’t currently overbought nor oversold.
Bitcoin analysis – trading ideas
You must be wondering what to do, right? However, the answer to this question has many layers since there are more possibilities.
The first and the most obvious move you can make is to stay out of the market until the trend returns to bullish. It’s not that it is in the bearish area at the moment but there is an 80% possibility that this will happen. Therefore, by simply remaining in fiat or a stablecoin until more favorable market conditions return.
Yet, during the bear market brings potential profits if a trader is risk-prone and skillful.
By shorting Bitcoin with leverage on some of the trading platforms that support this, you can gain more BTC. Therefore, let us show you two ideas.
The first one on the chart above is a bit riskier and may not happen at all. Still, traders would need to wait until the price of Bitcoin hits the lower high again, take a short position and wait until it hits the target. A good entry would be in the area between $9,250 and $9,300, while the first valid target is around $8,500.
The second option is to wait for the price to break down from the triangle to take a short position. But, once the price starts declining under the triangle lows, it may be hard to enter the satisfying trade because, sometimes, it just drops too quickly. The reason for that are many trading bots which automatically place orders much faster than any human being could ever do.
In both cases, the first target traders need to aim for is at approximately $8,500. Just as a reminder, today, at the time of our Bitcoin analysis, the price of Bitcoin is $9,200. That means that the target is 7.6% lower than the current price.
Other possible targets
Now, remember that we have told you to keep that 61.8% on Fibonacci in mind? OK, so, usually, entering the long position at that level can be considered as a logical move. In fact, 61.8%, more often than not, is the level where the trend reverses. If it doesn’t, it is hard to expect for 78.6% level to provide any support, and we will once again be at the beginning.
Why 78.6% can’t keep the support?
Well, just look at the chart below. By zooming out and looking at the big picture (which you always should do), we realize that, historically, on the way down, Bitcoin may encounter three support levels.
None of these levels coincides with the mentioned 78.6% Fibonacci level. Therefore, it is highly unlikely that we are to see Bitcoin’s decline stop there. Instead, we have $7,700 and $7,400 support levels as historically proven pivotal points.
Today, we are also going to add a little something to our Bitcoin analysis. It is just a line. Single line. One line that adds a new perspective to the situation. Those that have read this article carefully will realize what it means.
Our technical analysis is done with the professional cryptocurrency trader’s tool – Coinalyze.
You should look elsewhere for investment advice since this isn’t it. Even if it looks like it, it’s not. Cryptocurrencies are known to be extremely volatile and risky speculations. Always do your own research. Consider to consult an investment professional prior to investing your money.