With the formation of a higher swing low on August 15th the current structure is looking more like a triangle with an apex around mid September. Typically these might be expected to be a continuation pattern with a break to the upside but in my view this is not likely. What is likely however is that once this triangle breaks, it is going to move violently. The range is tightening and volume is falling, traders have been getting chopped up and are now waiting for the breakout, with plenty of orders and stop losses set around these levels just waiting to cascade.
So why does this look bearish to me? Lets start with volume. The selling pressure from the swing highs has been ferocious, buying at the lows... not so much. On balance volume has been incredibly weak throughout this range and continues to make lower lows.
With bitcoin dominance over alts increasing it seems like there is little new money coming in and a lot of the buying has come from existing money trading out of alts. That is a limited pool of money and not strong hands buying.
Now looking at the daily chart we can see that the 50ma has rolled over and the price has already had multiple tests of the 100ma along with the ascending trendline. In the previous bull run the 100ma acted as support a number of times with a strong move bouncing off it. A small failed rally followed by a quick return and now grinding along it is not a strong sign it will hold. There is also potentially an angled head and shoulders pattern across this trendline.
Finally a look at the weekly chart. There are some real nasty looking wicks up there and the ascending trendline based on weekly closes was broken last week, with a failed retest from below this week. We can see just how crazy this run up was as there is really only one horizontal support around $9k which was already tested twice. I don't expect it to hold if tested again.
In my opinion a deeper correction here would be the healthiest thing for bitcoin, setting us up for another strong move going into the halvening. The 350%+ run up in three months was insane and a parabolic move like that usually means a big crash. It ended just about in time to the point I don't expect another 80% drop to happen, although we should never rule anything out. I get the impression a lot of the moves were triggered by a combination of short squeezes and altcoin capitulation. Such a run also means mining profitability went through the roof so miners have greater incentive to sell at these levels. What I am watching for here is a daily close below the 100ma + trendline combo which should trigger a larger move down and a break of the $9k level. If this happens we can start to look closer at potential areas for a bottom. The longer the current range holds the better things look for the bulls, and a break back above $12k would make me super bullish short term.
So why does this look bearish to me? Lets start with volume. The selling pressure from the swing highs has been ferocious, buying at the lows... not so much. On balance volume has been incredibly weak throughout this range and continues to make lower lows.
With bitcoin dominance over alts increasing it seems like there is little new money coming in and a lot of the buying has come from existing money trading out of alts. That is a limited pool of money and not strong hands buying.
Now looking at the daily chart we can see that the 50ma has rolled over and the price has already had multiple tests of the 100ma along with the ascending trendline. In the previous bull run the 100ma acted as support a number of times with a strong move bouncing off it. A small failed rally followed by a quick return and now grinding along it is not a strong sign it will hold. There is also potentially an angled head and shoulders pattern across this trendline.
Finally a look at the weekly chart. There are some real nasty looking wicks up there and the ascending trendline based on weekly closes was broken last week, with a failed retest from below this week. We can see just how crazy this run up was as there is really only one horizontal support around $9k which was already tested twice. I don't expect it to hold if tested again.
In my opinion a deeper correction here would be the healthiest thing for bitcoin, setting us up for another strong move going into the halvening. The 350%+ run up in three months was insane and a parabolic move like that usually means a big crash. It ended just about in time to the point I don't expect another 80% drop to happen, although we should never rule anything out. I get the impression a lot of the moves were triggered by a combination of short squeezes and altcoin capitulation. Such a run also means mining profitability went through the roof so miners have greater incentive to sell at these levels. What I am watching for here is a daily close below the 100ma + trendline combo which should trigger a larger move down and a break of the $9k level. If this happens we can start to look closer at potential areas for a bottom. The longer the current range holds the better things look for the bulls, and a break back above $12k would make me super bullish short term.