Why Bitcoin (BTC) Is Not Going Down Before A Strong Move To The Upside

Why Bitcoin (BTC) Is Not Going Down Before A Strong Move To The Upside

Bitcoin (BTC) rallied the past few days as expected but the price is now back near the 38.2% Fib retracement level. It is expected the price will test this level and consolidate above it to make its next move towards the 61.8% Fib level leading to a big spike towards $4,200. This move will set the ground for a swift fall towards $3,000 in the weeks ahead. We do not expect the next correction to kick in without this move. The bullish gartley pattern seen on the 4H chart for BTC/USD will also come to fruition with this move. Furthermore, the price is also expected to decline in the same manner that it rallied since the beginning of February, 2019.

The price of Bitcoin (BTC) has now reached overbought conditions on larger time frames but there is still plenty of room for short term rallies. This week’s close is going to be critical in determining the direction of Bitcoin (BTC) for the weeks to come. If the price closes above $4,000 we might see the correction begin as early as the beginning of next week. However, if the price closes around $3,800 we might see the correction delayed by another week. There is no doubt that BTC/USD is not out of the woods yet. For investors to turn bullish again, the price has to climb past $6,000. On the other hand, for investors to turn bearish, the price just has to drop from current levels.

We may disagree on whether BTC/USD has bottomed yet or not but the probability of a steady decline from current levels is a lot higher than that of a rise. That being said, this is not the time to start shorting Bitcoin (BTC) either. As the 4H chart for BTCUSDShorts shows, the number of margined shorts has yet to run into a strong resistance. We expect BTCUSDShorts to test the trend line resistance in the near future. If it faces a strong rejection as we expect it to, we should see BTC/USD rally hard short term. This would push the price of Bitcoin (BTC) above $4,000. One thing to note here is that if BTCUSDShorts ends up breaking its support around 17,347 we could see a sharp decline in sell pressure and BTC/USD could shoot up towards $6,000.

Given the long term outlook of Bitcoin (BTC), we do not expect BTCUSDShorts to break its support around 17,347 but it remains a possibility nonetheless. The most probable scenario would be for BTCUSDShorts to face a strong rejection at the trend line resistance and decline back to the support line to form a triple bottom. This would pave the way for another move towards the trend line resistance which would most likely be broken the next time and would trigger a massive panic sell in Bitcoin (BTC) that would see the price ultimately drop towards its true bottom in the weeks and months to come.

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