Calm Before Storm as Bitcoin Wedged Into Apex - Price Analysis

  • Short term: break up or down likely soon, breakout trading applies
  • Long term: uptrend remains intact, but break down will have us watch more closely

With only 12 hours left before this week’s candle close, Bitcoin (BTC) looks poised to break up or down soon out of a consolidation area - and the direction of the breakout may determine Bitcoin’s market characteristics for the rest of 2019. Here we take a bit of time to look at various indicators, which will aid us in determining what is happening when price starts to move up or down.

We start with the daily chart, just to get the general picture. Bitcoin has been consolidation in a sideways triangle consolidation pattern, complete with falling volume. This consolidation is underpinned by a long uptrend line with resonance starting in February.

Two patternsBTC chart by TradingView

If Bitcoin breaks down from the triangle pattern, it seems likely that the parallel channel will serve as a second front on the downside.

If we look at the 4-hour chart, we should highlight the 200 exponential moving average (EMA, red). This level has been very important for the 2019 Bitcoin market, as it held the uptrend from February to July 14.

Poised to moveBTC chart by TradingView

If Bitcoin breaks up in the coming week or so, retaking and staying above this level will signal a renewed and full uptrend. But for now, even the 55 EMA is holding back the leading crypto.

On the downside, we should step far back to the weekly chart, in order to get a sense for when - if it comes to that - we should start worrying about the grand 2019 uptrend. Two important moving averages are highlighted here, whose importance is drawn from the previous 2016-17 Bitcoin bull market.

13 and 21 EMA are important on weekly chartBTC chart by TradingView

The 13- and 21-week EMAs marked the range for Bitcoin downside for that market. Sometimes price closed below the 13, and sometimes price dropped below the 21 - but never closed below it. Here, we see that the 13 EMA has been respected so far. If it is breached, the 21 is next. Only closing below the 21 should have us about the 2019(-20?) Bitcoin uptrend.

A final chart we can look at is again the weekly, but with a wide range of EMAs visible. We call this a “fan,” and the notable thing is that it is “fanning” up in a perfect gradient: from shortest timeframe on top to longest on bottom. This fan is the exact same one which preceded the 2016-17 bull market.

EMA fan looks fantasticBTC chart by TradingView

We’ll also note here that the 0.382 Fibonacci retrace level has been tested and even breached within the December 2018 market structure. If we have another trip to the downside, the 0.5 fib level is the next target to watch out for - perhaps for a piercing of the 21-week EMA as described above.

The views and opinions expressed here do not reflect those of and do not constitute financial advice. Always do your own research.