Bitcoin: The Bear Market is Just Getting Started

 

Before delving into this price analysis, please review the former article regarding premiums on exchanges, which can be found here:

https://blog.zerononcense.com/2018/10/21/explaining-the-bitcoin-tether-premium-fiasco/

Bitcoin Price Analysis

Straight away, the first thing that’s worth looking at is the daily view to see if the alleged symmetrical triangle pattern is holding up:

https://www.tradingview.com/x/5pXqVYhF/

In the picture above, we can see what appears to be a symmetrical triangle pattern formation.

What is a Symmetrical Triangle? (Brief Refresher Course)

For those that may be lost or that simply do not understand what a symmetrical triangle is, please check out the images below:

You get the picture by this point.

If you’re looking for a quick list of criteria to use to judge the general direction of a symmetric triangle, look no further than the one provided on the website, stockcharts.

Source: https://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:symmetrical_triangle_continuation

 

Now, Let’s Take a Look at Bitcoin Again

https://www.tradingview.com/x/G14zIMKe/

 

The first characteristic worth noting on this chart, however, is the fact that the price is currently adhering to the bottom line. This is usually a sign of heavy bear pressure.

https://www.tradingview.com/x/lcsDF9DC/

 

If You’re Looking Closely, You’ll Notice the Price of Bitcoin Does Not Match a Symmetrical Triangle

This bearish adherence to the bottom side of the symmetrical triangle is shown in the chart above.

However, it is not enough to merely look at these charts, we must note the dramatic difference in slope of these two lines.

One often overlooked facet of the symmetrical pattern is the fact that the slopes of the lines usually should be roughly equal.

In this case, they are not. In fact, the slope of the upper downtrend resistance line is substantially steeper than the slope of the underlying support trendline.

Check this out:

https://www.tradingview.com/x/pXXaaKGc/

 

In the picture above, we can see that the downtrend resistance is hanging at 30 degrees.

https://www.tradingview.com/x/IeHF4090/

 

However, the uptrend support is currently only calculated at 4 degrees according to this chart.

Now, here are a couple of quick notes about these calculations:

Because of the fluctuations on the TradingView charts, the mode was switched to lock price ratio, in order to get a fixed calculation for both angles.

Analysis of the Angles

From this very aspect alone, the future for Bitcoin, pricewise, looks extremely bleak for bulls. As mentioned above, the greater the angle of the trendline, the the stronger the support/resistance. Conversely, the smaller the angle of the trendline, the weaker the support/resistance.

In fact, given the weakness of the lower trendline, it would be wholly inaccurate to consider the pattern on Bitcoin currently to be in a symmetrical triangle.

Further Trendline Analysis

The upper trendline has also resulted in the stoppage of multiple noteworthy ‘bull run’ attempts.

For example:

https://www.tradingview.com/x/1949qBPc/

In the chart above, we can see that the price of Bitcoin has been stifled multiple times.

Fibonacci Indicators

Perhaps one of the most reliable support/resistance systems in all of trading is the Fibonacci indicator.

This indicator typically makes assessments of the price that are difficult to deny.

Let’s start with the Fibonacci Wedge, shall we?

Below is what the Fibonacci Wedge looks like when applied on a price chart in TradingView:

https://www.tradingview.com/x/Rypicaa6/

 

Here are the steps to plot the Fib Wedge:

  1. You make sure that the ‘starting point’ of the wedge is at the peak, or the price’s all-time high.
  2. Then you extend the chart going out toward the starting point of the price movement. In this instance, we chose August 2015 as our starting point.
  3. You must then extend the remainder of the circle to the right of the all-time high (in the future) the same distance.
  4. The distance between September 2015 and December 2017 (ATH for Bitcoin) = 2 years and 3 months.
  5. Thus, we must extend the circle 2 years and 3 months into the future. That puts us at March 2020.

If you look at the chart below, you can see that the price action adheres to this Fib Wedge pretty solidly:

https://www.tradingview.com/x/I533U9u2/

 

In the picture above, we can see that the price is literally nudging against that 61.8% retracement point.

A further breakdown would put it in the 78.6% retracement zone.

https://www.tradingview.com/x/nWxejZ0f/

 

As one can see in the picture above, the worst case scenario for Bitcoin would probably be crashing down to $2.5k (assuming that the 78.6% Fib retracement holds).

We do not anticipate that happening and one reason why is due to the fib speed resistance angles on Bitcoin.

Below is a picture that shows what this is:

https://www.tradingview.com/x/YUnr3Nnu/

 

In a nutshell, the Fib Speed Resistance dictates the speed at which Bitcoin is decreasing. You draw these resistance levels by tracing the price from the all-time high to the subsequent lowest price and the rest of the indicator graphs itself it from there.

https://www.tradingview.com/x/gcgT4LNM/

 

In the price above, we assume that the price will continue to adhere to the long-term downtrend resistance that is currently imposed upon the price at this very moment.

That would bring the target price all the way down to $4.5k as the official (bottom).

Which, all things considered, is not a bad landing spot for bulls, as it is certainly much less of a drop than what Bitcoin has already experienced and it is certainly much less of a drop than what Bitcoin has experienced even in 2018 between localized highs and bottoms.

In the chart above, we can also see that the maximum upside for Bitcoin is more than likely $6.8k.

https://www.tradingview.com/x/iB90ea99/

 

Conclusion

There are substantially more points that are worthy of note than what is seen in this article, but this overview generally sums up what can be gleaned about the price of Bitcoin in the very near future.

 

 

 

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