As our usual tweets have stated, Bitcoin had raised over $ 21,000 since the July low in a general supply area that brought us to our short-term target of between 50,000 and 51,300. We have referred to this supply as the “spring bag holders” who at the moment are happy to come out with less losses than if they were selling at a minimum. That said, we are confident that a large number of investors were shaken from their positions in late July.
After a month of concentration in the aforementioned supply area, we are not surprised to see a period of consolidation or price decline. We continue to believe that while less support at Kijun Span (44,000) will offer some measure of short-term support, 42,300 seems more likely to be the negative target of this setback. What follows is an analysis of multiple frameworks that leads us to this technical thesis.
The graph above reflects the long-term price action that gave us confidence that at least a significant minimum had occurred. Although at the end of July we were worried that if the sellers kept their shoulder to the door of the stand they would result in the triple bottom. During the last week of July, Bitcoin concentrated sharply and there was a strong reversal of momentum on the negative side that witnessed the turn to the Fisher (yellow circle) transformation, which was followed by a turn to MACD (green circle) back into positive territory above its signal line (see our multi-chapter technical tutorial on MACD for those interested in learning the application of the momentum indicator). Bitcoin’s ability to unite first through potential resistance at the 38.2% setback level after a brief break and through the 50% setback level, trusts us that historical highs will be challenged.
Marc’s daily schedule
The daily chart shows in much more detail why we considered, after a long month of progress, why Bitcoin would probably stop at the 50,000 to 51,300 level.
One of the most misused technical terms in the technical analysis is a “head and shoulders” price pattern, but the period between February and mid-May was, however, a period of distribution whatever the nickname that s ‘use.
Investors who bought during this period and were not part of the selling group were what we call the “spring bag holders”. These buyers will probably still lick their wounds if they weren’t shaken to the bare minimum. No wonder the lows advance has stalled, as you can hear them say “let me out with a smaller loss”.
When the short-term high reached our target level and prices began to fall, we added the standard Pitchfork (red P1 to P3). So far the midline has remained as support (red dotted line) and prices remain in the upper channel. That said, hopefully more time and a potentially deeper price pullback may be needed before the attack on the price resistance band and finally resuming all-time highs. We now mark short-term support at Kijun Span (44,000) and second at the 38.2% Fibonacci retracement level (42,300).
240 minute time frame
When prices reached the target level and fell, we added the Schiff Modified Pitchfork fork (gold P1 to P3). The retreat of recent highs slowed yesterday at the lower parallel of Pitchfork and Bitcoin rose, but has stagnated at the midline (golden dotted line).
At the very least, the price action since we chose the Schiff Modified version of Andrews Pitchfork was correct, as it marks the price and time vector. It also tracks the angle of consent of the clouds. If the support at the bottom parallel of the fork is breached, there is likely to be a short-term TDST support test on the cards at 44,165.
Resources and Learning
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