The Bitcoin (BTC) market seems to be getting more erratic as it closes in on the end of its consolidation pattern, with a violent reversal yesterday from what was looking like another leg down to the bottom of this pattern. It seems that Bitcoin bulls stepped in big time to reclaim control over the market, in a move that could hardly be considered organic.
Bitcoin made it down to $9,600 on the dollar (Bitstamp), before being launched back up for an eventual $800 reversal - perhaps a sample of the notorious “Bart Head” reversal pattern. We can see on this 4-hour chart a neat rejection at the 200 exponential moving average (EMA), which has been an important level in the 2019 Bitcoin market.
It is possible that this latest move indicates a shrinking trading range within the consolidation pattern. We see that a tighter trend line from the last two swing lows has been formed, and will be something to watch if and when Bitcoin swings back to retest the lows.
Looking at the daily chart, there is plenty to note regarding the consolidation pattern and what it means. First of all, we can note that price seems to be building up at the top of the range, especially after yesterday’s violent reversal. This may suggest a more bullish quality to the pattern as it nears its end.
Second, the structure’s lows are clearly bowing neatly up on this representative Coinbase chart. This bowing trendline refutes earlier thinking that the pattern in question may have been a descending triangle, as it is drawn here.
Descending triangles are generally considered bearish and predicting a breakdown in price. If price continues to leave the descending triangle interpretation behind, we might add another bullish piece of evidence to our expectations.
Indicators seem less and less helpful in this high-tension environment of reversals, as the market’s bulls and bears battle it out. The stakes of this fight will be the direction of Bitcoin’s breakout from its months-long consolidation - sure to be explosive, whichever way wins.
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