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Bitcoin (BTC)’s Future Outlook Hinges On Price Action In Next Few Days

Bitcoin (BTC)’s Future Outlook Hinges On Price Action In Next Few Days

Bitcoin (BTC) has printed most of the patterns of the 2014-15 trading cycle so far. The more we see this cycle proceed towards completion, the easier it becomes to spot similarities between now and then. However, the price does not often follow the exact same price action. In other words, history may not necessarily repeat itself but it does rhyme. That is exactly what we have seen happen in the past several months of Bitcoin (BTC)’s bear trend. Certain movements are hard to time but others like a break of market structure or resistance at a historical trend line resistance are more pronounced and relatively easier to spot. This time, BTC/USD is testing a critical trend line resistance which is going to determine its future outlook.

If the price breaks above this resistance, we can finally consider the bear market to be over and the price will then be expected to begin a new cycle. On the other hand, if BTC/USD faces a strong rejection at this level, we will have confirmation of further downside in the weeks ahead. It is important to note that if BTC/USD breaks above the trend line resistance, we will have a confirmation that the price has already bottomed. Bitcoin (BTC) may still fall in the weeks ahead as it is overbought on the weekly time frame but it will find support on the previous trend line and will thus not fall below the December, 2018 lows. On the other hand, if BTC/USD fails to break past this resistance, we will see the price decline below the 200 Week MA to find its true bottom below $3,000.

It is interesting to see that the number of margined shorts for BTC/USD is in a steady decline despite the lack of bullish momentum. It appears that the bulls are reluctant to step up but at the same time the bears are even more scared fearing a strong move to the upside. If Bitcoin (BTC) breaks above the critical resistance, we might see the number of shorts decline even more aggressively. It is important to note that the price of Bitcoin (BTC) is already down more than 85% from its all-time high.

Shorting Bitcoin (BTC) especially when it remains oversold on lower time frames is extremely risky and the bears realize it now which is why they are closing their short positions even though BTC/USD has not made any significant moves to the upside yet. While Bitcoin (BTC) might still break past the trend line resistance to formally put an end to this bear market, BTCUSDShorts is still massively oversold on the weekly time frame which means that Bitcoin (BTC) will eventually see a sharp pullback even if it ends up breaking past the critical resistance. While the past few weeks have changed the perspective of professional traders on the direction of the market, the majority of retail traders are still anxiously anticipating a sharp decline in the near future.

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