• Bitcoin price has been stuck within consolidation for three weeks; the next move will be trend defining.
  • BTC/USD price action has formed a bearish pennant structure, which is vulnerable to downside risks.

BTC/USD Recent Price Behaviour

The Bitcoin price has been moving within consolidation mode for three weeks now, is very tight conditions. In terms of the range, the high is seen up at $8800, with a low down at $7800. It has been in effect since 25 September, after a deep fall that came into play 23 September. The price dropped some 20%, from the heights of $10,000 down to $7790, which was the lowest seen since June 2019.

As noted with the consolidation observed, price action has formed a bearish pennant structure. Technically, BTC is exposed to further downside, should the bears manage to capitalize on the pattern. If a breakout is seen, then another strong wave of selling pressure will very likely follow. It would be very punishing for the Bitcoin price from the pivotal levels seen.

BTC/USD daily chart.

2019 Recovery

It cannot be taken away from Bitcoin the impressive run to the north it has had in 2019, a strong recovery. The price started the year down at depressed levels of $3500, after bottoming out in 2018 down at $3100. It had initially gained over 300%, before topping out within the $13,000 price area. It was the highest the price had traded at since January 2018, when the market was within-firm control of the bears.

Since losing control in over June-July within the $13,000 region, the price has fallen some 40%. It is still holding a very respectable gain for the year, but nevertheless, there isn’t a sign at present to change the current trend south. The intensity of the current move lower would raise the case to see a stronger move to the downside. There is just one major barrier of support, which is around the $7500-7000 area.

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Trade Recommendation

Given the noted pennant structure, further moves south should be eyed, unless the bulls can defy the odds of the pennant. In terms of downside, a confirmation would be a daily breakout closure below and retest of the structure. Entry would be ideal around $7800-8000, once the described has been completed. Targets; $6150, $5000 and then $3500, stops would be at $9000.

An upside scenario could come into play; the bulls will need to force a daily closure above and retest of $8800. Targets would then be; $10,000, $10,500 and then $12,500. Stops to be placed at $7500 for the described play.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

 



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