Bitcoin Price Seeks Direction as Trading Range Narrows

Bitcoin’s price range continues to narrow with each passing day, but a big move on either side could happen soon, the technical charts suggest.

Having witnessed a bull reversal on Wednesday, prices on CoinDesk’s bitcoin price index (BPI) rose to $11,711 at 03:59 yesterday. It appeared as though bitcoin (BTC) would break above $12,000 and confirm completion of the bottoming process.

However, prices fell back to $10,889 at 17:59 UTC. Bitcoin bulls made another attempt to regain lost glory, but faced rejection at $11,608 in Asian hours today.

The failure to capitalize on Wednesday’s bull reversal has yielded a drop to a three-day low of $10,321 today. As of writing, BTC is changing hands at around $10,600. The cryptocurrency has depreciated by 4.11 percent in the last 24 hours, says data source OnChainFX.

Further, the drop from the previous day’s high of $11,711 to below $10,500 has neutralized the immediate outlook. A break either up or down would likely set the tone for the next major move.

4-hour chart

The above chart (prices as per Coinbase) shows bitcoin has created a symmetrical triangle. It comprises of two converging trendlines, representing a series of sequentially lower peaks and higher troughs. It is a trend continuation pattern, i.e. it usually ends with a big move in the direction of the original trend.

In BTC’s case, the symmetrical triangle is formed in a downtrend (sell-off from a record high of $20,000). So, the narrowing price range (symmetrical triangle) could end with a big move to the downside.

Such a move would open doors for a slide to $5,232 (target as per the measured height method – the difference between triangle high and low subtracted from the breakdown price/triangle support of $10,480). However, the downside target sounds far-fetched.

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Nevertheless, BTC could revisit $9,000 following confirmation (4-hour close below triangle support) of a downside break of the symmetrical triangle pattern. The relative strength index (RSI) is sloping downwards, suggesting scope for a drop in prices. The key MAs – 50, 100, 200 – are sloping downwards in favor of the bears. So, the downside break looks likely as per the 4-hour chart.

That said, the dips below the $10,000 mark are to be viewed with caution says the daily chart.

Daily chart

So far, the bears have consistently failed to keep BTC prices under $10,000. Also, BTC has been able to avoid a daily close (as per UTC) below $10,391 (50 percent Fibonacci retracement of 2017 low to high). Further, the rising trendline (drawn from July low and September low) support is lined up at $9,370.

So, there is always a risk of BTC running into bids anywhere between $9,000 to $10,000.

View

  • A bearish symmetrical triangle breakdown could yield a sell-off to $9,000, but dips below $10,000 could be transient.
  • Only a daily close (as per UTC) below the ascending trendline support of $9,370 would open doors for a sustained move lower to $8,148 (61.8 percent Fibonacci retracement of 2017 low to high).
  • Bullish Scenario: An upside break of the symmetrical triangle would add credence to persistent demand around $10,000 and could see BTC test resistance at $13,000 and $14,622 (50-day moving average) over the weekend.

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Coinbase.

Steps with arrows image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.

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