Trading Bitcoin: Will $9k Hold?

Will $9k Hold?

Will $9k hold? After a decline of $800 in the past two days, Bitcoin is now trading at $9.5k. Ever since Bitcoin created a lower high at $12.3k, the posture of the trend has been bearish. Additionally, Bitcoin created another lower high at $11k after being rejected at $12.3k. This series of lower highs with a base at $9.5k has created a descending triangle formation. In classical technical analysis, descending triangles break to the downside 70% of the time. If this triangle should breakdown, look for a buying opportunity in the $7k-$8.5k price region. However, Bitcoin bounced off the 128MA (green) which has been an instrumental support level throughout Bitcoin’s history. In fact, between November 2015 and January 2018, price never broke below the 128MA support level.

Yesterday, price declined to $9.4k then bounced off support at the 128MA. On the daily chart above, the sequential indicator is on a red 4 of 9 candle. Therefore, bearish to neutral price action is expected to continue for the next 3 days. Furthermore, the Lucid SAR (blue x’s) and the 50MA (gray) are both acting as resistance at $10k. While support has held temporarily, the bulls have significant resistance at $10k and will likely be rejected if a reaction rally should occur.

4 Hour

After bouncing off support at $9.4k, Bitcoin’s sequential indicator is on a green 2 on the 4 hour chart above. Moreover, if our current green 2 candle closes above the previous green 1 candle, then a long trade is activated on a 4 hour timeframe. While sequential theory is signaling a long trade, the 50MA (gray) and the Lucid SAR (blue x’s) are both acting as resistance at $10k. If a reaction rally should occur today after yesterday’s significant decline, the bulls will likely be rejected at $10k.

Conclusion

Will $9k hold? -Most likely no. While price has bounced off support on the 128MA, the posture of the trend remains bearish. Bitcoin is in a descending triangle formation and is in grave danger of falling to the $7k-$8.5k price region. A decline of this magnitude would present an excellent buying opportunity. Conversely, if a reaction rally should occur today, the bulls will likely be rejected at $10k. Until Bitcoin can create a higher high above $11k, the structure of the overall trend remains bearish.

Disclaimer: The author of the article hodls Bitcoin.