Bitcoin Hammering Floor Of Descending Triangle - Will It Break?
- Bitcoin is down a sharp 8.2% over the week as the bulls battle around 31K.
- The cryptocurrency is trading inside a large descending triangle pattern as it knocks on the door of the lower boundary.
- A breakdown of this pattern could result in BTC hitting as low as 16K in a worst-case scenario.
Bitcoin is down a very sharp 8% over the week as the cryptocurrency drops into the current 31.3K level. It is now hammering the floor of a long-term descending triangle pattern with the triangle floor at around $31,100.
It seems that the long-drawn-out consolidation period, already 8-weeks in, has started to turn the sentiment around BTC pretty bearish, with many investors now expecting a downside break beneath 30K. So far, in the past two months, BTC has only spent one daily candle beneath 30K, in which it spiked as low as $28,775. Furthermore, it has only spiked beneath the current triangle a total of three times.
Bitcoin Price Analysis
What has been going on?
Taking a look at the daily chart above, we can see the descending triangle that is in play, highlighted by the orange boundaries. The cryptocurrency is now testing the lower boundary of this triangle pattern.
Typically, the more times, the lower boundary is tested, the more likely it is to break toward the downside. So far, the floor of this triangle, which sits at around
31K, has been tested a total of ten times, with four of the tests coming in the past week alone. If BTC continues to hammer the floor, it is likely to break toward the downside and could potentially lead to BTC dropping as low as 16K on a purely technical analysis basis. Additionally, the support at $31,500, provided by the double bottom that was seen toward the end of June, has also been invalidated over the weekend as BTC managed to close a daily candle beneath this level. The floor of the triangle remains the major support for the market to hold.
Bitcoin price short-term prediction: NEUTRAL
Bitcoin still remains neutral in the short term and would have to break above resistance at $42,000 to start to turn bullish again. On the other side, a daily closing candle beneath $30,000 would be required to turn the market bearish. The first signal for the breakdown would be a closing candle beneath the current triangle.
Looking ahead, the first support lies between $31,100 and $31,000, provided by the floor of the triangle. Beneath the triangle, support lies at $30,680, $30,500 (short term downside 1.414 Fib Extension), and $30,000.
If the bears continue beneath $30,000, support is then located at $29,710 (short term downside 1.414 Fib Extension), $28,775 (June lows), $28,000, and $27,000 (downside 1.414 Fib Extension - orange).
Where Is The Resistance Toward The Upside?
On the other side, the first resistance lies at $32,120. This is followed by $33,000 (upper angle of the triangle & 20-day MA), $34,000, $34,700 (50-day MA), and $35,000 (bearish .5 Fib Retracement). Added resistance lies at $35,600, $36,660, and $38,000.
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