Bitcoin - Continuation pattern or a top?Bitcoin - continuation pattern or a top?
Determining whether the pattern is a continuation or a top pattern can be challenging. One signifies a bullish trend while the other indicates a bearish trend, and we find ourselves amidst a 4-week range on the bitcoin chart. So, how do you proceed?
To analyse the situation, I typically examine the chart across various time frames. In the case of Bitcoin, both the daily and weekly charts present a mixed picture, leaving room for either pattern interpretation. However, the monthly chart suggests we might be approaching the upper boundary of a 4-year channel (refer to the chart below), though it's not conclusive yet. Zooming back to the daily chart, we observe that the market is encountering the 20-day moving average at 67,414, while on the 4-hourly chart, it appears to be stalling near the top of the cloud.
This additional insight is beneficial. Considering the proximity to the upper boundary of the 4-year channel, the moving average, and the cloud, our inclination leans towards a downside bias, particularly if the market remains capped by the 20-day moving average.
To confirm a downward trend, we would need to breach the recent low at 59,705. However, if our assessment is incorrect, a key indicator to watch for would be a close above the 20-day moving average, redirecting focus towards the upper boundary of the 4-month range, currently around 72,200. A close above this level would bolster the case for a continuation pattern, with further confirmation above the March high of 74,415.
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