Bitcoin (BTC) Technical Analysis: Bullish Reversal Soon? Think AgainOctober 18, 2018
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Bitcoin had everybody excited at the start of this week as it blew through its long-standing resistance with a huge 22% (+/-) gain against the US dollar, in response to Tether’s price unpegging from its $1 ‘stable’ value. In a matter of hours the #1 cryptocurrency was able to soar to $7,800 from $6,380, as traders sharply exited out of the collapsing USDT coin into BTC to secure their funds. However, Bitcoin’s position at its new price point was unlikely to last for long and after a heavy correction it quickly plummeted back below the strong resistance at $6,800.
Since that hair-raising market reaction on Monday bulls have seemingly disappeared from the BTC market, indicating that the recent pump was neither a legitimate bullish reversal nor a sign of new bullish sentiment for the asset.
Diving into the 2hr BTC/USD chart, we can see that Bitcoin appears to have resumed its bearish decline as it continues to slide further below $6,800 with little bullish pushback. At a glance, it looks like the asset might even throw back onto the long-standing resistance and find new support here before bulls are able to recharge and make their next move.
When we connect the recent lows and highs of the last 48hrs, however, there could be an argument that the asset might be consolidating inside a potential bullish pennant. This is difficult to confirm though, as the explosive bull run earlier in the week has thrown off a lot of indicators making it especially difficult to gauge Bitcoin’s momentum.
If this idea does occur, we will need to see candles close comfortably above the $6,800 before reconsidering a bullish reversal. It is worth remembering though that bears still remain in control of the asset for now, and a breakout from this pattern could easily be a bull trap set up to shake out smaller investors before Whales crash the price further. Entering into this potential breakout early would be very risky, so make sure you have appropriate stop losses set before jumping back into the BTC market.
For now the $6,800 resistance remains a critical level for Bitcoin and will be a key factor in determining whether the asset will break back upward or continue bearish. If the asset does consolidate and breaks above this level, then we may even see candles break through the resisting kumo on the 1D ichimoku indicator which would be a promising indication of a reversal. However, in the absence of any real bullish sentiment in the Bitcoin market right now, it is looking increasingly likely that the asset will break bearish and continue downward before any further ground is made.
Throwback support area – $6,500 – $6,450
Main Support – $6,400
Main Resistance – $6,800
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