Bitcoin price is creeping toward the edge of a precipice, but the question is: will decline make it to below the local support floor?.
Time of analysis: 14h00 UTC
From the analysis pages of xbt.social, earlier today:
Price continues conforming to our expectation of decline. Potentially, decline could target $320 and 2100 CNY, as per the pending abt.social trade recommendation. Since we do not, at this stage, know if price will sell through the support floor, we have to strategise and control trading risk.
The circular trendlines (visible to xbt.social members) are not accurately “fitted” at this time, but a sharp drop will certainly confirm their influence, since price waves tend to decline once price leaves the south eastern perimeter of a circular trendline.
Notice that the 4hr 20MA is bearing down on price. Its crossover should accompany our sell signal in the 1hr chart.
The 1hr chart shows the latest corrective structure closer up. The wave labeled “2” in this 1hr view had retraced wave 1 by exactly 0.618, a textbook Fibonacci retracement for a second wave. Had the bitcoin chart manifested classic Elliott Wave relationships with more regularity and consistency, this would have been a strong confirmation that price will decline in a 3rd wave to the downside. Although it does increase our confidence, we cannot rely on wave patterns and ratios in the bitcoin chart, and we wait for the xbt.social sell signal.
The 1hr sell signal may be only hours away. However, if the correction compounds – as it did in the example circled in the left of the 1hr chart – then we may have to wait for at least another day.
Technical analysis has been emphasizing a bearish outlook, and we certainly see the signs in the chart, but there is a very real danger that price only declines to the local support floor near $365 (Bitstamp) and 2450 CNY. Traders should enter a signaled short trade with a quarter-size position – not to allow a wider stop-loss, but to allow closing the position at minimal loss should price bounce from the support floor.
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Bitcoin price charts from TradingView.
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