After a typically volatile week for Bitcoin, some traders are beginning to question whether the most recent rally towards $12,500 was merely a flash in the pan or perhaps signs of a spectacular rise brewing in the cryptocurrency.
The Point & Figure chart above suggests that the bulls should proceed with caution in the short-term, as the latest drop in value has obliterated the bullish support line that BTCUSD has steadily traced for quite some time now. Technically speaking, we’ve switched to a longer-term bearish trend following this move.
Should Bitcoin continue to plummet, we may be looking at $9,000 as a potential downside target before sizeable demand steps in to show interest. Alternatively, suppose we began to see the price creep back above $11,000 again (now acting as resistance) and consolidating above this level. In that case, chances are we may see the elusive bull run materialize once again.
There may have also been a clue on the daily candlestick chart leading up to the recent drop with the development of a Head & Shoulders reversal pattern, as shown below. It just goes to show that classic reversal signals are worth considering in any form of technical analysis.
I suspect we’ll see further large price swings within Bitcoin and other cryptos vying for the top-ten market cap spots during the later part of 2020, as we’ve witnessed in previous years. However, Bitcoin’s short-term picture looks unconvincing and tilting more towards the bearish camp at this stage.
If you wish to catch up on all this week’s Chart of The Day mentions, links are provided below.
Note: Click on charts to enlarge.
By Adam Taylor CTEe
Sources: Go Markets, Meta Trader 5, TradingView, Bloomberg
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