After reaching its all-time high price of USD 16,480 since 2018, Bitcoin has been on a short term downward channel. Speculations around how high will the price go already started to spread across the crypto realm. Some assume that the price hike was due to uncertainty in legacy markets, while other enthusiasts await further price increases onwards. But what’s ACTUALLY happening with Bitcoin prices and how should traders set their backup plans?
A previous “Bullseye” from Cryptoticker
In a previous article, we analyzed the price of Bitcoin, drawing parallels to similar price-action behaviors from 2017, where prices around the same areas were directional towards new areas, specifically with Area #4 (Fig.1).
Bitcoin Technical Analysis
Like every weekend, we notice a pattern of increased volatility in the cryptocurrency markets in tandem with a sharp increase in prices. This price spike is almost always followed by a price adjustment the following Monday. This is interpreted by people having free time at home away from their daily office jobs, more prone to trade on the weekends since the cryptocurrency markets are open 24/7, unlike Legacy Markets.
In figure 2, we plot the Fibonacci retracement to look out for potential price adjustments. If any, prices are expected to fall down to the 38.2% level or the 50% level (USD 16,103 and USD 16,056 respectively).
Where is the price of Bitcoin heading towards?
After reaching Area #4 from our previous analysis (for quick context, area #4 is the psychological price of USD 16,000), we cannot but assume that the price will continue on its uptrend to reach the next psychological price of USD 17,000.
But before throwing any allegation of price hypes, the price of Bitcoin MUST exit its short-term price adjustment which formed a downward channel ever since reaching the all-time high since 2018 of USD 16,480 (Fig.3).
If prices succeed in breaking the channel (without forming any extended fake-outs), a potential reach towards area #5 should be a short-term goal, that’s if all other parameters in the crypto market remain constant, which is something not likely.
In all cases, traders who just entered the market should proceed with caution as we enter risky territories. ALWAYS make sure to plot resistance areas where you automatically pull out of the market and limit your losses, in this case, use areas 1 to 5 depending on risk appetite.
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