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Bitcoin (BTC) Likely To Close The Week Above $4,000 But Uncertainties Loom Over

Bitcoin (BTC) Likely To Close The Week Above $4,000 But Uncertainties Loom Over
Breaking News / Bitcoin / Analytics

Bitcoin (BTC) is expected to finally close the weekly candle above $4,000 given its current outlook. The 1H chart for BTC/USD shows that the price has ample room to shoot towards the top right of the bullish gartley formation before the weekly close. This would set the ground for a steady decline in the weeks ahead as the bears assume control. However, this time around things are not so simple. While the bulls are not in charge, the bears seem to be losing control as well as the number of margined shorts has just topped out and we could see a strong decline in sell pressure starting next week. This means that the decline from $4,000 or higher to begin the fifth corrective wave to the downside might not be so simple and straightforward.

Considering that a lot of traders are expecting a sharp decline now that BTC/USD seems to have topped out on the weekly time frame, we expect that the whales might lure some bears into opening margined shorts at this point just to liquidate their positions soon afterwards. This would come in the form of a short squeeze which would result in margined shorts liquidated or forced to close which will lead to a bug spike in BTC/USD. That might end up trapping some bulls and only then the whales would pull the plug and force the price to decline. We could have seen the decline last week as well but the setup was not as confusing so the whales removed all hope of a decline by pulling the price around the weekly close so as to prevent a close above $4,000.

The price is very likely to close above $4,000 this time but the setup is a lot more confusing. If we look at the daily chart for BTC/USD we can see that the price has formed a major bear flag which will eventually have to break to the downside. However, it is hard to tell how high the price might go before it comes down. It would not be surprising to see the price shoot up towards the 200 day moving average before it begins to decline. The number of margined shorts is already too high which has to come down in the days ahead. This means that there is a high probability of a strong move to the upside before the final decline.

At this point, most traders and analysts are convinced that the price has to fall again. There might be differences over targets but most agree on the decline. Some expect the price to decline to $3,000 while others expect it to drop a lot further. We expect BTC/USD to decline sharply to $2,400 after which it may continue to trade sideways for a while before its next decline to even lower levels. This decline would coincide with a decline in the stock market and might be a lot more devastating than the November-December decline of 2018.

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