Bitcoin Enters Bullish Channel After Binance Volume Overload
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- Bitcoin has entered an upward channel after a weekend of crazy price action
- Binance’s fee-free trading on Bitcoin saw trading levels match the March 2020 crash
- Bitcoin couldn’t sustain any momentum from the huge buys, and the picture still looks unclear
Bitcoin has entered an upward channel that has seen it hold above $20,000, as massive fee-free wash trading on Binance caused volume spikes. Having broken above the wedge it had been coiling into since mid-June, Bitcoin couldn’t break above two key resistance areas on the low and high timeframes, with bulls hoping that the newly established channel will hold and keep Bitcoin’s slow recovery going.
Bitcoin Breaks Free…For a While
We reported last week how Bitcoin was coiling inside a wedge that would determine its short term future, and it somehow managed to be bullish and bearish at the same time:
As we can see, Bitcoin successfully broke out of the wedge only to fall right back towards the region again after rejecting at $22,500. What this has left us with is an upward channel that has the potential to take Bitcoin higher, if the support line holds:
All the while Bitcoin stays in this channel this is good news, with higher lows being complemented by higher highs. There is however a case to be made that the price action over the weekend that saw Bitcoin jump to $22,500 was manipulated, being a result of Binance celebrating its fifth birthday by scrapping trading fees for Bitcoin. This saw rampant wash trading and massive volume spikes, with Friday representing the biggest single day’s trading volume on BTC/USDT since the March crash of 2020.
There are two important differences from those two days though – the March 2020 crash ended very, very green as buyers snapped up reduced Bitcoin, whereas the daily candle for Friday, and the two candles since, were red, meaning that more people were selling than buying on those days.
Another Wedge Playing Out?
There is an alternative charting pattern that we can observe while looking at Bitcoin’s price action – another wedge:
This is more neutral than the channel as it could break either up or down, with the price action at the support line (if it gets there) being all-important once again. Wedges are typically continuation rather than reversal patterns, and like we saw with the previous wedge, even if it breaks up rather than down it may not stay there for long.