Sun. Aug 7th, 2022

Bitcoin tags a bottom against key price ranges

Bitcoin (BTC) Gann Chart

A series of major price ranges and levels have generated a substantial low for Bitcoin over the past 48-hours. On the chart above, we can see yesterday’s (December 18th, 2019) wick bottomed near the 4/8 inner harmonic at $6343.51 (thin, light blue line). There are two other support ranges below that have contributed to this bounce: the 61.8% Fibonacci arc and the 1×3 angle that price bounced off. The price action generated significant speculation that the bottom for Bitcoin may be in and that this single bullish bounce could be the beginning of a new bull trend. Volume may confirm at least some of that sentiment because yesterday’s volume was larger than the prior day’s volume. Yesterday’s volume was the largest volume day for Bitcoin in the last twenty-one days. The volume was also more than twice the twenty-day volume average.

Bitcoin (BTC) Weekly Ichimoku Chart

Using another form of analysis can help confirm the idea that the bottom of Bitcoin is in. The chart above is Bitcoin’s weekly Ichimoku chart. I’ve written in previous articles that one of the most important levels on Bitcoin’s weekly Ichimoku chart is the position of Senkou Span B. Senkou Span B is the most difficult level for price to cross and it often represents the final support or resistance. For Bitcoin, Senkou Span B represents the final support level before a true capitulation event could occur. We’ve seen Bitcoin trade below Senkou Span B for most of the trading week until it found substantial support and bounce up. So, where did Bitcoin find support if price was trading below the Cloud? The Chikou Span found that support. The Chikou Span found support against the Kijun-Sen and continues to treat Kijun-Sen as support. Bitcoin is currently trading on top of the Senkou Span B on the weekly chart. It needs to remain above that level (7150) for Bitcoin to maintain a supportive and bullish weekly chart.

Bitcoin (BTC) Point & Figure Chart

The final chart to help confirm a bottom in Bitcoin’s market is Bitcoin’s Point & Figure chart. You will see that I have identified two trade ideas for both the long and short side of the market, depending on where Bitcoin would break. A double-bottom formed at 6600, but support was found and we can see the response that Bitcoin generated. The long entry is above at the 8000 value area, which would be a break of the double top formed at 7800. The diagonal red lines above represent a cluster of dominant bear trend angles, which represents significant resistance to any further upside momentum. However, we need to be aware of the conditions found on the other two charts and how price moving higher could influence the Point & Figure chart. We also need to be aware that the cryptocurrency market is an extremely volatile one and that massive 1k to 2k moves in Bitcoin are not out of the ordinary. On the contrary, moves of over 20% to 30% are the norm when Bitcoin begins a new bull trend.