Is bitcoin going further down or will it bounce and continue its uptrend? That’s the hottest question on the market right now. When I was reading the twitter feed (the bitcoin’s price was trying to break above 7,400), lots of decent traders were bullish as hell. People were opening longs like it’s 2017 bull run all over again. Their hopes and dreams were soon obliterated by a big red candle.
In my last “Bitcoin Update” post, when the price was still 6,830 I advised extra caution around the 7,500 area. When the price started dropping it needed only two hours to reach the channel support. The channel support didn’t hold for long and the price plunged further down towards 6,300 area, where the selling pressure has been absorbed in the past. This breakdown has signaled the continuation of the prevailing trend.
4 hour chart
Bitcoin is forming a bearish flag on the smaller time frame. However, when the time will come for a decisive move, I expect that the pattern will resemble a broadening formation. The reason behind is that I expect an upward move (pullback) towards the 6,700 area. If everything comes together I’ll open my short position as high as possible because I expect that the downtrend will continue.
Daily time frame
Bitcoin has bounced from the bearish descending resistance area marked with the yellow color. The price is being pulled towards the main support area. The MACD on a daily timeframe is signaling short and the RSI levels have room to descend further down. I think the answer to the question, is bitcoin going further down, is clear. Over the years I’ve learned that I have to be ready for both scenarios but right now I don’t see any signs yet that the current downtrend is reversing.