Bitcoin Close to Making Big Decision

Alan Penny

24 September 2019

3 min read

Bitcoin/gold trading

  • Bitcoin falls for third day in a row
  • Crypto testing major support level underneath
  • Support level is the bottom of a rectangle/descending triangle

Bitcoin traders have had a couple of bad days in a row, and alarm bells are starting to ring. We are approaching a major area of decision-making, and therefore the next few days should be crucial as to where Bitcoin goes. What’s particularly concerning suddenly is that the cryptocurrency is not reacting positively to fiat currencies falling at this point. Bitcoin has decoupled from the gold market, something it had moved in tandem with, as central banks around the world continue to cut interest rates and some even start to add to their balance sheets. In a world where it’s a race to the bottom in the forex world, it’s a bit concerning that the Bitcoin market isn’t showing its strength exactly when it should.

Bitcoin continues to drift lower

BTC chart

BTC/USD daily chart

While there hasn’t exactly been a meltdown, the market had been very flat for five or six sessions in a row. Over the last three days, the market has dropped slightly to lose roughly $1000. At this point, the last couple of daily candlesticks have been less than impressive. Beyond that, the hammer-shaped candle from last week being broken to the downside is also another reason why this chart is something to be concerned about.

Support level underneath

The $9250 level is massive as far support is concerned, as it is not only the bottom of a rectangle, but also potentially the bottom of the descending triangle. A descending triangle is a very negative formation, but it won’t be confirmed until we close below the $9250 level on a daily chart. If it does, Bitcoin could drop by $5000 roughly, based on the measured move of the triangle. Obviously, that would be a huge turnaround and would probably wipe out a lot of confidence yet again.

The alternate scenario

There is always an alternate scenario. In this market, it would be Bitcoin breaking above the descending-triangle downtrend line above. That means breaking above the $10,250 level on a daily close. If that happens, then the market should be able to go towards the $12,000 level, possibly even the $14,000 level based on recent action. This would be very bullish, but what is concerning is the fact that the fundamental drivers of Bitcoin don’t seem to be affecting price.

The trade over the next few days

There should be a big trade coming in the next few sessions. So far, it looks as if it will be a selling opportunity. However, a certain amount of patience will be needed to take advantage of either trade set until that happens. Waiting for a daily close outside of the descending triangle gives a huge hint as to where the market is going to go next. Waiting for the daily close will be crucial, because the market should make such a big move. That’s something which a few dollars here and there shouldn’t make a huge difference to.

Written By
Alan Penny

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