Trading Bitcoin: Waterfall Bounces From $9.5k

Waterfall Bounces From $9.5k

Yesterday was a rough day for Bitcoin and traditional markets. In yesterday’s article we noted, “As of now, the daily chart is presenting significant bearish indicators which create a price target of $9.5k. This price also aligns with the 0.382 fibonacci support level and the sequential setup trend line.”

After falling from $11.3k, Bitcoin bounced off our target of $9.5k. Currently, Bitcoin is trading at roughly $10k which seems to be serving as a 5-figure psychological support level. However, the 0.382 fibonacci support level at $9.5k is the last area of critical support for the bulls. In fact, $9.5k is beginning to act as the base for a potential descending triangle formation. In classical technical analysis, descending triangles break to the downside 70% of the time. If price cannot break above the previous lower high at $12.3k, then Bitcoin is in danger of forming this pattern, similar to the formation we saw at $6k.

Daily

On the daily chart above, Bitcoin is on a red 6 of 9 candle. Furthermore, sequential theory is telling us Bitcoin will likely experience three more days of downward to neutral price action before a potential reversal. Additionally, Bitcoin’s daily RSI is not yet in oversold territory, therefore, there is a possibility we could break below critical support at $9.5k.

4 Hour

Bitcoin is currently on a green 2 of 9 candle after flipping from a red 9. As you can see, price came incredibly close to our previous target at the 0.382 fibonacci level. Price has fallen below all three moving averages which, in theory, should now serve as resistance.

Conclusion

Regardless of news events, Bitcoin is in danger of falling into a descending triangle with a base at $9.5k. In order to avoid this fate, the bulls must break above the previous lower high at $12.3k to negate this fatal pattern. As of now, tentative support remains at $10k while critical support stands at $9.5k. The first resistance level for the bulls is $10.3k.