Cryptoanalysis: Bitcoin Starts to Fall, but Where Does it Stop?

Bitcoin started its decline today. The market leader continued its downtrend after falling below the resistance at $37,500. This brings us to the question: where will Bitcoin end up? Let’s look at the graphs.

The big picture

Let’s analyze the Bitcoin daily chart first. Here each candle represents 24 hours, allowing us to look back at price trends. As you can see, there are a number of things plotted here, but for this analysis we will focus on the red line and the green area.

This choice was made because the black line (support around $25,000) and the gray zone (key price level around $30,500) are now very far away from the current price. Furthermore, Bitcoin still looks very strong despite the decline. There is therefore little reason to believe that the price will rise again in the short term.

This also has to do with a pattern that Bitcoin is currently making. Despite the expected decline after Bitcoin fell below $37,500, things still look good in the medium term.

This is due to the ascending triangle, also called the ascending triangle. It’s a bullish pattern that usually emerges at the top, but what is it and how does it work?

An ascending triangle

To clarify this, let’s also take a look at the 4-hour chart. Here each candle represents 4 hours so we can see the price in more detail. This way we can see the drawings, but also the price movements, better than on the daily chart.

An ascending triangle is created because a coin no longer passes through a horizontal zone. The coin then basically falls every time (as we see below). This can be seen as a negative, but there is another important factor: increasingly higher minimums.

Due to the latter, the price actually forms a triangle in which the highs are (approximately) the same and the lows become higher and higher. Essentially, this means that at the same time buyers continue to sell, buyers continue to buy more and more of the currency.

If this continues for a longer period of time, there comes a point where buyers can push the price above the horizontal zone (in this case the green zone). And when that happens, change usually happens. The zone then becomes support instead of resistance.

This is very positive as buy orders are placed where they were previously sold. Unfortunately, this didn’t happen when Bitcoin first broke the horizontal zone, but perhaps Bitcoin will make another attempt (after hitting a higher low).