Bitcoin’s (BTC) recent decline has creating some very interesting developments on charts.
Specifically, the recent decline below $3,400 has brought Bitcoin (BTC) to a critical Gann level (not shown). The Gann level, combined with the late January time frame, hints that a reversal higher could occur. It also implies that it better occur soon.
Also, the Wyckoff bottoming pattern match has reached a point where Bitcoin (BTC) must hold if the basing scenario is still relevant.
Looking at Bitcoin (BTC) on BitMEX, Bitcoin (BTC) may be in Phase C (Figure 1 & 2). In this phase, Bitcoin should not make a new low (Figure 2). In some ways, this $3,400 may be a good spot. It is in line with the scenario but is low enough to make it very hard to be bullish. Sometimes, when it’s hard to be bullish, that’s when you should be.
Figure 1 Figure 2
Conversely, it is unnerving that Bitcoin (BTC) is nearly $200 below its 21-day moving average (Figure 3). The 21-day moving average is a key metric of market momentum. So, looking at this vantage point, Bitcoin’s (BTC) recent decline is not good for bulls. The next support level below is dangerously close to the low at $3,264.
Bottom Line: You can make an argument that the bullish scenario for Bitcoin (BTC) was really hurt by yesterday’s decline. What seems clear is that Bitcoin (BTC) needs to start recovering soon.
The Crypto.IQ Trading Desk is watching closely to see if the recent support levels will hold and will take the appropriate action.
Join me there as we look for signs of a turn in Bitcoin (BTC) one way or the other.