In the past few weeks Bitcoin reached this year’s low at $ 6.000 and bounced in a straight run-up fashion towards $ 11.800. It formed a V pattern, followed by a retracement and a bounce which completed an inverse head and shoulders pattern. The right shoulder support managed to keep the bears in line at around $ 9.300. This was also my partial re-entry point, which I mentioned in the previous Bitcoin Update post.
Right now you have to keep an eye on the support line which confirmed itself with the last lower-high at around $ 9.300. The next important thing to consider is the inverted head and shoulders neckline, lying at around $ 11.700- 11.900, where there is strong resistance.
There are currently two scenarios on the table. Bitcoin has been running low on fuel during the last breakout attempt (bearish divergence) and is currently heading towards the support line. Let’s see if it holds. Otherwise dump everything and open short positions because we’re going down. Re-buy your positions after a strong support conformation. I estimate that the first stop would be at around $ 9.000 and if this one won’t hold, it will possibly test the support at around $ 8.000.
The best case scenario is the retest of the current support line and a nice healthy bounce towards the neckline resistance. I expect the breakout at around $11.700. with the increased volume. The next strong resistance is at around $ 13.000 where I expect a pullback and a shorter consolidation period. If it will manage to break the resistance with the needed help of positive news (Lightning Network progress) we’ll be heading towards $ 16.000.