This Bitcoin Consolidation Is A Signal For Big Profit

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Bitcoin Price Analysis 07/31/2020 – New Consolidation

Bitcoin Price Key Highlights

  • Bitcoin price has formed lower highs and higher lows, creating a triangle formation on its 1-hour time frame.
  • Price is currently bouncing off the resistance and could be due for another test of support around 2600.00.
  • Technical indicators are giving mixed signals, but the big catalysts this week could spur a strong directional move.

Bitcoin price is stuck in consolidation as traders are biting their nails ahead of a big market catalyst.

Technical Indicator Signals

The 100 SMA is crossing above the longer-term 200 SMA to signal that the path of least resistance is to the upside. This could mean that the triangle support could be more likely to hold as a floor than to break or that an upside break past the resistance around 2750 might be underway.

Note that the triangle formation spans 2200 to 2900 so the resulting breakout could last by the same amount. However, the moving averages might also be oscillating to signal that further consolidation is possible.

Stochastic is on its way down so bitcoin price might follow suit. RSI is also heading south to signal that sellers have the upper hand for now. But once both oscillators hit oversold levels and turn higher, buying pressure could return.

Also note that the triangle support is steeper compared to the resistance, which is also indicative of stronger buying pressure.

Market Factors

Traders are playing it safe ahead of the August 1 upgrade to SegWit as this could signal whether or not hard fork issues could continue to stay in place. Over the weekend, a number of exchanges already issued warnings to their clients about holding bitcoin deposits and the potential incompatibilities that may arise.

If the industry is able to emerge from this test unscathed, bitcoin price could be on its way to break past its record highs. On the other hand, weak support for the new version of the software could mean more losses for the cryptocurrency. Also, additional volatility is to be expected as the shift draws near as evidenced by the market reaction to the other week’s BIP 91 lock-in.

Bitcoin Price Analysis: Consolidation Primes Market for Big Move

For several weeks, bitcoin has remained in a consolidating uptrend. The market hasn’t seen a new high since mid-September, but the lows have steadily gained higher and higher ground. Overall, the volume is highly consolidated and the market is ready for a large move — the question is, where will it move next?

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Figure 1: BTC-USD, Daily Candles, Sideways Consolidation

The market has been range-bound for weeks and has maintained a very consistent but very non-eventful uptrend. An interesting thing to note, however, is how slowly and steadily the bitcoin market had begun its march toward its multi-month downtrend:

Figure 2: BTC-USD, 12-Hour Candles, Historic Downtrend

A test of this downtrend will yield important information about what investors can expect in the coming weeks and months. A decisive break of the downtrend will be a very strong buy signal to a lot of large players that have capital sidelined. If the market manages to break and hold support above the downtrend, that will be a sign to many investors that, at minimum, a break of the downtrend is likely and a new trend is likely to develop. Whether that new trend yields a sustained uptrend, sideways consolidation or a temporary reprieve from months and months of a bear market remains to be seen. However, it will, at minimum, be a point of high volatility and likely be the sign of hope the battered bulls are looking for.

However, if this test is rejected, bitcoin will undoubtedly see a test of the high $5,000s to the low $6,000s range. A rejection of this downtrend would be the result of poor market demand as this would be the fifth rejection so far, and I would highly expect to see a test of new lows.

Whether or not the market rejects or blows right through the downtrend line remains to be seen. Either way, I would personally consider this a no-trade zone. The market is very tightly consolidated and squeezed between support and resistance, and I would highly expect the next move to be very strong. The next move will likely shape the state of the market for weeks and months to come.

If we look at the lower time frames, we can see a very well-defined supply-and-demand channel that has governed the bitcoin market over the last few weeks:

Figure 3: BTC-USD, 6-Hour Candles, Supply-and-Demand Channel

This supply-and-demand channel has shown a relatively bullish trend as the market has made consistently higher lows with consolidating volume. The downtrend (outlined in red) shows just how close the market is to its next test and, given the supply-and-demand channel, it seems unlikely that any major movement will occur without a proper test of the downtrend. Similarly, the next major movement will likely be in the form of a channel breakout either to the upside or the downside. The first signs of strength or weakness in the market will be either a failure to maintain the uptrend/support of the demand side, or a complete breakout to the upside of the channel. For now, we will have to wait and see if demand surfaces on the next test of the multi-month downtrend.

  1. For several weeks, bitcoin has consolidated in an upward sloping supply and demand channel.
  2. Overall, the market is very tightly consolidated and will likely yield a very large, sustained move. It is unclear whether or not the move will be to the downside or the upside.
  3. We are slowly snaking our way toward a multi-month downtrend and will have the market making its fifth test of the resistance. If we manage to break the downtrend line, we will likely see a strong swell of demand hit the market as it will be a sign to large investors that the market is exhibiting signs of bearish exhaustion. However, if we reject the downtrend line, I fully expect to see a test of the upper $5,000 range before any meaningful demand surfaces.

Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

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Bitcoin Is Facing A Pull-Back And Consolidation, According To Bitcoin Analyst

Overall, the crypto markets have tallied significant gains over the past several weeks. The winds may be changing slightly in the mid-term, however, according to crypto influencer and technical analyst Brian Krogsgard, a.k.a. Ledger Status on Twitter.

General sentiment in the crypto space appears to include both further possible upside for Bitcoin, as well as potential upcoming sideways or downward action. Krogsgard noted crypto’s largest asset may be a bit far extended, according to an interview with Crypto Potato on June 3.

“I’m in the camp of looking for pullbacks in terms of being a confident buyer moving forward,” Krogsgard said. “We’ve pretty far extended our way up, and even something like the daily Bollinger Band midline is around $8,200,” he added. “The 50-day moving average [MA] is around $6,700, so there’s quite a mean reversion play available.”

When Bitcoin surged above the $9,000 mark, the asset was met with a sizeable amount sell pressure, Krogsgard noted. “For a variety of reasons, I am looking for some degree of pullback, but I’m mostly looking to be able to buy the right dip rather than try to short this whole thing down.”

The influencer and podcast host noted he is not sure when such a pullback will occur, although he does think a retracement will occur in some capacity. “I don’t think it’ll be necessarily a 50% pullback,” he said. “Historically, 30-40% pullbacks, even in a bull market when the bull market is going really fast, [are] pretty normal.”

As far as a move back up to $9,000 and beyond for Bitcoin, prior to a more extended retracement or consolidation, Krogsgard pointed toward $9,600 and $10,000 as seemingly formidable resistance levels, mentioning that $9,600 was the April 2020 top and $10,000 could prove to be a psychological resistance.

“Maybe we’ll get up there around $9,600. I’d be shocked if we spend any time towards $10,000. Even $9,600 feels less likely to me, just because I think there’s a lot of people willing to sell between $9,000 and $9,600.”

If Bitcoin rises further up from here, Krogsgard expects the move to be a “divergent leg” of sorts, showing decreasing market momentum while price continues higher. In this scenario, he mentioned he would also look for decreased volume and lower highs on indicators such as the relative strength index (RSI).

The influencer noted a divergence on the daily candle chart already has occurred. He said he also has his eyes peeled for divergences on the weekly time frame chart to occur. “There’s a bear div [divergence] on the 3-day already, so, we could see, over the course of a month, some sideways mild down action, and maybe make a slight higher high, but I would expect that to be the type of divergence we’re looking for,” he said.

“We really just haven’t had enough consolidation on high timeframes. If you look at the weekly chart, it’s just week after week after week of extremely bullish momentum and at some point that stuff has to wane.

Regarding Bitcoin’s consolidation, Ledger Status said he sees the $7,200 zone as the “lower bound” of what might be referred to as a normal consolidation range. “Even if we get a $1,000 move, to me that could still be just normal consolidation in this range and we could still make a weekly bear div having dropped to $7,200,” he said.

At press time, Bitcoin holds a price in the $8,500 range, according to CoinMarketCap.

*This article contains opinions and speculations from the author, those interviewed and others.

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