BTC Weekend Update: Chop Continues Before Next Trend Move
Updated
Primary Chart: Fibonacci Channel with Fibonacci Retracements of Entire Summer Rally
BRIEF SUMMARY:
BTCUSD continues to chop above and below the $19,246 level at the .786 retracement of the entire summer's rally. Failed breakouts above and below this level have occurred. As of early September 24, 2022, price is holding slightly below this level after a major rout in equity indices in Europe, US and Australia and other countries over the past couple weeks.
This .786 Fibonacci retracement was identified on September 12 and 16, 2022, posts, as well as discussed as a level of greater importance in the September 21, 2022 and September 19-20, 2022 updates.
On September 19-20, 2022 (Monday), the key levels to watch going into the FOMC presser on September 21, 2022 (Wednesday) were analyzed. Specifically, the charts discussed the "key Fibonacci retracements of the entire summer rally", noting that BTC had been holding near its .786 retracement, at $19,246, of the mid-June to mid-August 2022 rally. The September 19-20, 2022 post stated: "This level lies at $19,246, and price has made a couple attempts to break below it, each of which has failed, suggesting more sideways chop into the FOMC's meeting.
In the Primary Chart above, note how price has continued to chop above and below the .786 retracement at $19,246. Each breakout ends up being a trap move. This seems to be the chop zone that will be the base from which the next breakout will lead to the next large trend move down.
Price could break soon. The following support and trendline resistance areas suggest a right-angled (descending) triangle. These triangles suggest a breakout direction by the descending angle of the down trendline that composes the upper part of the triangle.
Supplementary Chart A: Support Zone and Descending Triangles
Further, price action seems to suggest that a break lower could occur at any moment. Before the break, be wary of more chop / whipsaw moves, especially a sharp move higher to trap bulls one last time before the next flush lower. A whipsaw move is not guaranteed, but would be unsurprising given the way BTC has chopped in volatile ways lately.
Supplementary Chart B: Key Horizontal Fibonacci Levels and Support Zone
Bears, on the other hand, should be prepared for a scenario where the next flush lower could be capitulatory, which may support conditions for a multi-month short-covering bear rally. While this bear rally is a more speculative concept based on the way markets behave after capitulatory lows, it's not unreasonable to consider potential possibilities if a severe flush arises the next few weeks. Traders may enjoy such a rally as well as shorting the next leg down of the bear market in coming months.
BRIEF SUMMARY:
- Price continues to chop above and below the $19,246 retracement level identified in prior posts in recent days.
- Price action appears to be consolidating before the next trend move—this next downward flush may occur very soon. During this consolidation, trapping price action is occurring where breakouts above and below $19,246 are failing, trapping bulls and bears. More chop could continue until the breakout.
- The breakout is likely to happen in the coming two weeks—this is confirmed by the Supplementary Chart below, showing that the apex of multiple triangles is very near. But watch for a more volatile whipsaw fakeout move just before the real move in the direction of the trend occurs.
- A key target zone is the $14,200-$16,200 area where the yellow circle has been placed on the chart above. This yellow circle overlays the teal .23 Fibonacci Channel line. A key Fibonacci retracement level at $16,098 coincides with this target zone.
- Below this target zone would be $13,900-$14,800, a support zone that coincides with 2019 peaks—see the blue rectangle. A horizontal Fibonacci level also coincides with this support zone, with a 1.272 extension at $14,275 running through the center of this support zone.
- Additionally, one important Fibonacci level of interest lies at $12,000-$12,107.
BTCUSD continues to chop above and below the $19,246 level at the .786 retracement of the entire summer's rally. Failed breakouts above and below this level have occurred. As of early September 24, 2022, price is holding slightly below this level after a major rout in equity indices in Europe, US and Australia and other countries over the past couple weeks.This .786 Fibonacci retracement was identified on September 12 and 16, 2022, posts, as well as discussed as a level of greater importance in the September 21, 2022 and September 19-20, 2022 updates.
On September 19-20, 2022 (Monday), the key levels to watch going into the FOMC presser on September 21, 2022 (Wednesday) were analyzed. Specifically, the charts discussed the "key Fibonacci retracements of the entire summer rally", noting that BTC had been holding near its .786 retracement, at $19,246, of the mid-June to mid-August 2022 rally. The September 19-20, 2022 post stated: "This level lies at $19,246, and price has made a couple attempts to break below it, each of which has failed, suggesting more sideways chop into the FOMC's meeting.
In the Primary Chart above, note how price has continued to chop above and below the .786 retracement at $19,246. Each breakout ends up being a trap move. This seems to be the chop zone that will be the base from which the next breakout will lead to the next large trend move down.
Price could break soon. The following support and trendline resistance areas suggest a right-angled (descending) triangle. These triangles suggest a breakout direction by the descending angle of the down trendline that composes the upper part of the triangle.
Supplementary Chart A: Support Zone and Descending Triangles
Further, price action seems to suggest that a break lower could occur at any moment. Before the break, be wary of more chop / whipsaw moves, especially a sharp move higher to trap bulls one last time before the next flush lower. A whipsaw move is not guaranteed, but would be unsurprising given the way BTC has chopped in volatile ways lately.
Supplementary Chart B: Key Horizontal Fibonacci Levels and Support Zone
Bears, on the other hand, should be prepared for a scenario where the next flush lower could be capitulatory, which may support conditions for a multi-month short-covering bear rally. While this bear rally is a more speculative concept based on the way markets behave after capitulatory lows, it's not unreasonable to consider potential possibilities if a severe flush arises the next few weeks. Traders may enjoy such a rally as well as shorting the next leg down of the bear market in coming months.
Note
There have been six failed breakouts above and below the .786 R at $19,246. Currently price is above this line and heading ever closer to the downtrend line that continues to decline each day, moving important resistance lower each day. Since mid-September 2022, BTC has gone nowhere, chopping relentlessly. As a separate but related post notes, BTC will likely break its multi-month triangle consolidation soon. The odds are that the break will be to the downside, but I'm waiting for conformation.Note
Price continues to chop around the $19,246 level at the .786 R, just as posted several days ago! This $19,246 level seems to be gaining importance. But it can't chop here forever, the declining 11-month trendline is rapidly approaching, and price decide whether to reject lower or not. 
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