Bitcoin have seen a very significant correction today morning. I personally do expect that Bitcoin is about to create something interesting in crypto market in coming days (by the start of November), only if some scenarios plays out favourably.
First of all, I am not a financial adviser. My intuitions can be wrong. Do your own research. The content in this website is intended to be used and must be used for informational purpose only. Let’s analyse what we are witnessing here.
The 58K Support
Bitcoin have massive rejections in that marked area ($58K) before and this previous resistance zone is acting as a strong support now. Previous resistance flipping into support is a major sign of price increase.
We are aware about 58,000 price retracement range, 57,500 is a very strong volume support for Bitcoin, which will help us in the long term uptrend. But the question still remains, Are we going to hold this support around 58,000? I am going to show you each and every scenario what could happen.
The 20 Exponential Moving Average and Williams Alligator Indicator
- The dead cat bounce scenario have already played out. If we hold this area without dropping down, we can almost see an upward rally.
- If we do close the candle above 20 exponential moving average, and analyzing Williams alligator indicator, we have a strong support there. We could see a consolidation in price of Bitcoin. The Williams Alligator indicator is a technical analysis tool that uses smoothed moving averages. The indicator uses a smoothed average calculated with a simple moving average (SMA) to start.
- If we break that support around $ 58K, then next possible support is lying around $ 51K and that is not what we want to see.
- Fibonacci retracements are hidden levels of the horizontal lines of support and resistance where Bitcoin prices may potentially reverse.
- If we look at the price action in the daily time frame – As Fibonacci extension line indicates, right now you can see, 0.786 (around $ 58,200) is a strong support of Bitcoin (again 58K becomes critical). So all these together shows we have a strong support around 58,000.
Head and Shoulders Pattern indicates Bearish trend (Warning?)
We have a head and shoulders pattern here, usually head and shoulders pattern is a bearish pattern. But there might be a slight twist. We have seen this before, we actually saw this when Bitcoin was in $40K – 42K range before it spikes to higher level. (With in last two months)
Another crazy thing is, if we look at 2017 Bitcoin price action chart, we have the same thing, similar pattern – head and shoulders. What we saw here was not a break down from this level. It seems 2017 is repeating. Same month, almost exact same dates.
Final clue on why this could not be a start of bear market
If we are entering into a bear market, it means $67,200K we saw a couple of days ago would be the peak of this four year cycle. But that is not something what we usually see in peak. Because every time we see peak in the cycle that correlates with a top in the RSI (Relative strength index) as well. So from the RSI show below the diagram, we are nowhere close to the same kind of levels we saw in previous cycles. That means we have not seen the peak price of this cycle yet.
These are not my findings. I have done my research and collected the data supporting my point of view. But I can be wrong, because still Head and shoulders is a strong bearish pattern. If Bitcoin fails to hold $58K resistance, there is a huge possibility for price drop (down trend) up to $51K price range. It can go both ways. Let’s just see what happens. I am curious.