Bitcoin Coiling Into Important Wedge
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- Bitcoin is coiling into a wedge that will determine its short term price action
- The continuation wedge suggests that down is a more likely direction than up
- Bitcoin hasn’t shown much strength since capitulating in June
Bitcoin is coiling into a wedge that will determine its short term price action, probably by the end of the week. Bitcoin has shown resilience since capitulating to $17,600 last month, but it has failed to show the strength required for anyone to have real conviction that the bottom is in. The wedge pattern Bitcoin is now in is technically a continuation pattern, suggesting that a move to the downside is the more likely outcome.
Boring Bitcoin About to Become Exciting?
Bitcoin has not been doing much since capitulating to $17,600 on the back of the Celsius news last month, but a clear wedge pattern has now emerged that will dictate the short term, and potentially longer term, action:
This wedge, which started in mid-June, looks set to be resolved no later than the weekend. Wedge patterns like this are not bullish or bearish on their own – moreover they are continuation patterns, meaning that price will continue in the direction it was going before the wedge was formed. As we can see, this is not good news for Bitcoin.
Give Me Support!
If Bitcoin does break down through this wedge as is technically more likely, we have already gone over the next areas where support can be found:
As we can see, if $20,000 is convincingly lost then the $14,000 and $12,000 regions are where we can expect to see buyers step in hard. This would take us right back to August 2020, before the bull run really took off, and presenting a golden opportunity to get on board with Bitcoin if you haven’t yet, or you have money waiting on the sidelines.
If however Bitcoin manages to break up and out of the wedge, we can look to the following areas of resistances – $24,000 and $28,000:
However, any bounce like this should be taken as a bull trap unless proven otherwise, with a sharp rejection anticipated, in line with this longer term view:
How Bitcoin manages with this wedge could determine the price action for the next free months as well as the next few weeks, so it’s certainly worth keeping an eye on…and having those lowball bids in play!