I have just noticed a potential new BTC short-term trend which I think I should share.
What did Bit Brain see?
While analysing the recent positive (but rather pathetic) BTC breakout from its converging triangle, I noticed too many parallel lines for it just to be a coincidence.
As I usually do in such cases, I drew in what I could see in order to try to find the pattern. (As seen below.)
It immediate became apparent that I was dealing with a descending channel, which I have to admit, caught me a little by surprise.
With a positive breakout from the converging triangle, I was expecting to see a more positive chart pattern. However, this does explain why the “breakout” was so puny and insignificant.
I have constructed a descending Fibonacci Channel which best fits the current data, as shown below.
Further Analysis
I am fairly certain that we are dealing with a descending channel, the implications of which have yet to be revealed. Last year BTC sat in a descending channel from late June right up until the end of the year.
I consider it highly unlikely that we will see a repeat of 2019, but one shouldn’t prematurely rule out any alternatives in uncertain times like these.
Major determining factors
The uncertainty in the markets is palpable. Did you see what Silver did yesterday? I wasn’t expecting to see $20 Silver yesterday, but I did. And then I saw $21 Silver. And then I saw $22 Silver…
Early this morning (UTC – as always), Silver was not far off $23 – a price target which may fall at any time…
… or one which could remain untouched as Silver plunges back downwards. What I’m saying is that the market is now extraordinarily capricious. Panic is starting to enter the air as the realisation that the current stock market bubble is 100% artificially induced begins to hit home.
Is a large crash imminent? Maybe; but never underestimate the power of denial when applied to herd mentality. The sheep-driven market could still push the stock market a whole lot higher before things finally implode!
I remind you that when the market does implode, it is almost certain to take Bitcoin with it. But unlike most other asset classes, cryptocurrencies should recover fast and hard – just as I expect Gold and Silver to do.
A second major determining factor is that Bitcoin is still oversold. The current price of BTC remains below that of my long-term trendline, generally a very reliable indicator of the relative state of BTC price (see chart below).
Implications
My last two BTC posts have predicted a price drop, based chiefly on a holistic view of market factors. The most recent wave of general market uncertainty upsets this view, possibly negating it altogether. In capricious times like these, BTC could easily go either way.
There is a possibility that this BTC descending channel is forming a bull flag, something along the lines of what’s indicated below:
Call that my “best guess” for the time being, realising that there are many other possibilities and that I assign a probability of less that 40% to this prediction.
The position of BTC price relative to the Long-Term Base Trendline makes me lean towards a bullish outlook, but in no way assures such a scenario.
Conclusion
I bought BTC again yesterday. Being oversold, I don’t see how this could possibly be a bad move. I stick to the maxim of “get in at a good price, don’t wait for the best price”. The timing of this buy was not scheduled: I didn’t have another DCA purchase planned until nest month. Nevertheless, market uncertainty – primarily to do with exchange rate fluctuations of my local fiat currency – prompted me to buy earlier rather than later.
I may not know what the markets are going to do next, but my belief in one thing remains steadfast: fiat currency markets are doomed to fail cataclysmically.
Yours in crypto
Bit Brain
All charts made by Bit Brain with TradingView
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