BTC Squeezing in Channel, Breakout Looms

Updated

BTC has been squeezing within a parallel bear-flag channel since mid-June 2022. This choppy, corrective action has directional traders likely frustrated for the past several weeks.

But a breakout looms. Volatility compression leads to vol expansion. The Bollinger Bands (BBs) are one of the best ways to gauge volatility compression and expansion. Note how the bands have narrowed substantially since last month. My SQZPRO indicator also shows just how tight the compression has become (red dots indicate the level of the squeeze with the BBs).

The price target of $12,173 per BTC still remains viable until further price action shows a trend reversal. I won't rehash the basis for that price target, but the analysis for it is linked in the related ideas below.

For now, the downtrend lines remain intact, and even the upper line of the parallel channel has not been tagged or violated.

Further, an Elliott Wave triangle appears to have formed in the price action. EW triangles are corrective in nature and typically appear as the penultimate wave in a 5-wave impulse move. Corrective triangles run counter-trend, and when completed, the primary (next larger degree) of trend resumes.

For EW triangles, at least 2 alternating waves have a Fibonacci relationship of .618. Wave C x .618 = 21,257 (approximately). The yellow Fibonacci .618 line shows the level where wave E would have a .618 relationship with wave C. This 21,300 should be watched for a reversal where price may begin its next leg downward.

Assuming the triangle pattern has mostly completed, the next leg would be a sharp decline that continues the preceding impulsive wave down. And the next leg down could likely reach - (for the reasons cited in related ideas linked below).

Note

In this post published yesterday, the level to watch was given at 21,257 (21,300 rounded). This clearly has been a key level today—whether it will hold as resistance or not, who knows. Price has been stalling here for a portion of the day.

But markets / prices do whatever they want, including violating key levels. I'm open to this possibility. This can leave even the most careful technical analysis in disarray and cause chart watchers to come up with a new reason why it violated the level . . . For the time being, it's interesting to watch price continue to bump into 21,257-21,300.

Note

1. The $21,300 / BTC Fibonacci level described in the first iteration of this post served as an important resistance point where price stalled in its first, second and third and fourth attempts to rise above it.
2. But price finally broke through the 21,300 level in the past 24 hours. This likely invalidates the potential for a triangle pattern under EW theory.
3. Fibonacci symmetry analysis may give us a clue about where the counter-trend rally may end. I will post separately on that this afternoon. For now, that level is $22,710-23,746. Above that, the trend would be more neutral and less bearish. Below that, remain bearish.

Note

BTC May Be Stalling at Symmetry Resistance

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