Trading Bitcoin: Time for Consolidation?

Time for Consolidation?

On the daily chart above, Bitcoin is on a red 2 on the sequential indicator. Moreover, there is plenty of time left in the count for price to fall further throughout the rest of the week. It is also significant that Bitcoin never retested resistance at the bottom of the descending triangle. Since Bitcoin didn’t even experience a dead cat bounce from $8.2k, the market appears to be even weaker than we thought. Additionally, the moving averages are about to form death cross, while the MACD just experienced a bearish crossover. There aren’t many technical reasons to be bullish. However, after the massive decline we experienced this week, the market may consolidate for another 2-3 weeks before another large move. This would be similar to the bullish price action we experienced in the beginning of April 2019 (only in the opposite direction this time). You can see this price action from April in the weekly chart below.

Weekly

Our current weekly candle is not a reversal 9 candle. In fact, our current weekly candle is similar to the bullish green 9 candle which rallied the market on the week of April 1st, 2019. Then, Bitcoin followed with 3 weeks of consolidation before another large move in the same direction. Giant engulfing 9 candles usually will lead to consolidation periods, followed by another massive move in the same direction. If price continues to slump into the weekend, look for consolidation before another large decline. If the bulls come in with strength this weekend, then our current weekly 9 candle may be a good buying opportunity.

Conclusion

After Bitcoin’s recent decline, price has remained at $7.4k. We may be in for 2-3 more weeks of price consolidation before another large move to the downside. However, if the bulls can gain some momentum going into the end of the week, our current weekly 9 may be a nice buying opportunity.