BTC/USD Breakout Likely
Hello traders,
Context
Bitcoin has been seeing record low volatility for a prolonged period, trading within a compressing range for almost three months now. Now, with BTC volatility at near-record low levels and the range shrunken, BTC is to experience a movement of large magnitude very soon. BTC has been trading within a symmetrical triangle with a support established since early May, and a resistance established since early June. However, BTC recently broke through this triangle's resistance yesterday when it broke past $9200.
Now, from a weekly perspective:
BTC broke out of a descending channel/slightly broadening wedge in May that it had been stuck in since local highs in June 2019. Ever since the start of June, all consolidation has been above this channel's resistance line. BTC seems to be turning previous resistance into support now. However, it is important to note that there is another very crucial resistance above at ~9.75K, which has been touched three times ever since it was established at BTC's ATH in 2017. It will be crucial that BTC surpasses this resistance before any larger upside move (crossing this resistance and flipping it to support would help incite a huge bull market BTW). This multi-year resistance is visible in the chart below:
Technical Indicator Analysis
First, let's analyze the 1D chart visible below where the symmetrical triangle is most visible:
First off, we can see that BTC has remained above the 200D SMA during this entire period of consolidation ever since it broke through this SMA on the 29th of April. We can also see that BTC is currently attempting to establish support above the 50D SMA. Support should be established above this SMA before any attempt to make a large upside breakout. Also, BTC is trading above the 20D SMA, currently trading above three significant SMAs on the daily time period. The daily RSI and MACD also support the bullish view, and seem to indicate that BTC may soon establish support above the 50D SMA and trade above beyond it. The RSI broke out of a downtrend in the beginning of July and has been trending upwards with the slightly upward trending price since then. The RSI also recently made a sharp move above 50 after recent consolidation. The MACD had been trending downwards ever since the beginning of May, but has recently stopped the downtrend and seems to be ready to commence an uptrend given the long downtrend and its recent indecisiveness.
Now, let's analyze the 1H chart below:
Here we can observe a symmetrical triangle in which BTC broke to the downside. Setting the target as the breakdown start - triangle height, BTC seems to have completed this pattern that played to the downside by now. Now, BTC seems primed for a move to the upside on lower timeframes after consolidating following yesterday's 9.2K resistance break. The RSI and MACD both seem to support this. The RSI broke out of a downtrend its been in ever since local highs and is now trending upwards. The MACD has done the same, and its histogram seems ready to turn green. BTC is also trading above the 20, 50, and 200H SMAs. However, it is important to note that there are many sell orders at 9.5K, and that this is a tough resistance.
Where could an upside break above $9500 take BTC?
If BTC successfully breaks 9.5K, the next big resistance to take on will be at 9.75K (where the multi-year resistance started since 2017 lies). However, I would expect a pause to any rally at 9.75K, where BTC may retrace to 9.5K to test previous resistance as support, and then attempt to break above 9.75K. If this break above 9.75K is successful, I believe the bull picture will be painted nice enough to take BTC past 10K with a big impulse. I believe this would look something like this:
(Note on this chart it is visible that BTC broke below the support line established since early May, however, this appears to have been a fakeout given the strong break above the support line that was threatening to turn resistance)
BTC may not immediately zoom past 10.5K as one might expect given the magnitude of move that is expected (despite the expected resistance there) though. It is possible BTC's behavior commences to adhere more evidently to an ascending triangle it's been caught within with resistance dating back to late 2019 and support dating back to late March. In this case, BTC would continue to trade under 10.5K until around September, where an upside break would be more likely than a downside break given the nature of the pattern and all the bullish confluence that would have been built up. Price action could look like the following in this case:
Always make sure to have stop losses when you are expecting the market to go a certain way! Luckily, since we have the support line from early May so close to the current price and a fakeout already occurred, placing a stop loss right under this support would be wise in my opinion. Good luck on your trades, and please drop a like and let me know what you think!
Note that this is not financial advise and that this information is for educational purposes only.
Context
Bitcoin has been seeing record low volatility for a prolonged period, trading within a compressing range for almost three months now. Now, with BTC volatility at near-record low levels and the range shrunken, BTC is to experience a movement of large magnitude very soon. BTC has been trading within a symmetrical triangle with a support established since early May, and a resistance established since early June. However, BTC recently broke through this triangle's resistance yesterday when it broke past $9200.
Now, from a weekly perspective:
BTC broke out of a descending channel/slightly broadening wedge in May that it had been stuck in since local highs in June 2019. Ever since the start of June, all consolidation has been above this channel's resistance line. BTC seems to be turning previous resistance into support now. However, it is important to note that there is another very crucial resistance above at ~9.75K, which has been touched three times ever since it was established at BTC's ATH in 2017. It will be crucial that BTC surpasses this resistance before any larger upside move (crossing this resistance and flipping it to support would help incite a huge bull market BTW). This multi-year resistance is visible in the chart below:
Technical Indicator Analysis
First, let's analyze the 1D chart visible below where the symmetrical triangle is most visible:
First off, we can see that BTC has remained above the 200D SMA during this entire period of consolidation ever since it broke through this SMA on the 29th of April. We can also see that BTC is currently attempting to establish support above the 50D SMA. Support should be established above this SMA before any attempt to make a large upside breakout. Also, BTC is trading above the 20D SMA, currently trading above three significant SMAs on the daily time period. The daily RSI and MACD also support the bullish view, and seem to indicate that BTC may soon establish support above the 50D SMA and trade above beyond it. The RSI broke out of a downtrend in the beginning of July and has been trending upwards with the slightly upward trending price since then. The RSI also recently made a sharp move above 50 after recent consolidation. The MACD had been trending downwards ever since the beginning of May, but has recently stopped the downtrend and seems to be ready to commence an uptrend given the long downtrend and its recent indecisiveness.
Now, let's analyze the 1H chart below:
Here we can observe a symmetrical triangle in which BTC broke to the downside. Setting the target as the breakdown start - triangle height, BTC seems to have completed this pattern that played to the downside by now. Now, BTC seems primed for a move to the upside on lower timeframes after consolidating following yesterday's 9.2K resistance break. The RSI and MACD both seem to support this. The RSI broke out of a downtrend its been in ever since local highs and is now trending upwards. The MACD has done the same, and its histogram seems ready to turn green. BTC is also trading above the 20, 50, and 200H SMAs. However, it is important to note that there are many sell orders at 9.5K, and that this is a tough resistance.
Where could an upside break above $9500 take BTC?
If BTC successfully breaks 9.5K, the next big resistance to take on will be at 9.75K (where the multi-year resistance started since 2017 lies). However, I would expect a pause to any rally at 9.75K, where BTC may retrace to 9.5K to test previous resistance as support, and then attempt to break above 9.75K. If this break above 9.75K is successful, I believe the bull picture will be painted nice enough to take BTC past 10K with a big impulse. I believe this would look something like this:
(Note on this chart it is visible that BTC broke below the support line established since early May, however, this appears to have been a fakeout given the strong break above the support line that was threatening to turn resistance)
BTC may not immediately zoom past 10.5K as one might expect given the magnitude of move that is expected (despite the expected resistance there) though. It is possible BTC's behavior commences to adhere more evidently to an ascending triangle it's been caught within with resistance dating back to late 2019 and support dating back to late March. In this case, BTC would continue to trade under 10.5K until around September, where an upside break would be more likely than a downside break given the nature of the pattern and all the bullish confluence that would have been built up. Price action could look like the following in this case:
Always make sure to have stop losses when you are expecting the market to go a certain way! Luckily, since we have the support line from early May so close to the current price and a fakeout already occurred, placing a stop loss right under this support would be wise in my opinion. Good luck on your trades, and please drop a like and let me know what you think!
Note that this is not financial advise and that this information is for educational purposes only.
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