The price of Bitcoin (BTC) has entered a stage of uncertainty since the month of May. This has made it difficult for investors and analysts to decide whether the price is still going down or if it has already broken the downtrend. The correction which began in December shows the price to be in a steady decline as shown on the BTC/USD daily chart above. The question now is whether that correction has ended or not. The above chart for BTC/USD shows three distinct possibilities.
The first possibility is the one shown by the yellow downtrend line that shows the price of Bitcoin (BTC) in a constant downtrend since the month of February. This downtrend line has not been breached one and extends all the way to the trend line for Bitcoin (BTC). Both of these lines meet in the month of September. The possibility of this scenario being followed is high as the downtrend line has held strongly since February. This scenario is also more credible because it does not take into account the early two waves of correction before the month of February which have mostly been a result of overreaction or stop hunting. If this scenario holds, we will see Bitcoin (BTC) move lower from current levels but the price will have to settle above the $5,800 support. If the $5,800 support is broken,this scenario will be rendered void.
The second scenario is a variant of the first one that requires Bitcoin (BTC) to fall lower from current levels but not to the $5,800 support. Instead, the price will have to settle above the trend line (shown in purple). The possibility of this scenario holding true is also very high but if it is rendered void, there might still be hope of a trend reversal for Bitcoin (BTC) as long as the price manages to hold the $5,800 support. The third scenario is an entirely a distinct one that states that Bitcoin (BTC) has already broken its downtrend (shown by white lines) and that the price will now continue to trade above the downtrend line before enough buyers get onboard to begin a new cycle.
This scenario is also in play on Bitcoin (BTC)’s 4H timeframe shown by the above chart for BTC/USD. The chart shows Bitcoin (BTC) trading in a triangle where the price has just run into a downtrend resistance. If this resistance is broken, Bitcoin (BTC) will begin a new trend at this point. However, all the technical indicators suggest that at this point the more likely scenario is that Bitcoin (BTC) will fall lower from current levels. Wave trend analysis for the above chart shows the price to have already topped out and is ready for a fall. In addition to that, the wave trend profile is trading in a rising wedge which shows that the fall might be more aggressive if the rising wedge is broken. The VIX profile for BTC/USD also shows a top formation which corroborates our view that the price is likely to continue to fall for now.