Bitcoin: Breakout or Reversal? Unpredictable Market As It Is

Technical Analysis is a really powerful tool for predicting possible market movements and getting trading signals. But if we talk about tools like levels, lines, chart patterns - traders can use them a little bit differently and as a result, get different signals from them. And only the market will show us who was right.

Based on the daily timeframe of Bitcoin, I can explain you this difference. We have a symmetrical triangle which belongs to the continuation and the reversal group of patterns. Triangles can be a reversal pattern if the direction of a breakout is against the previous trend. Triangles can be a continuation pattern if a breakout is in the direction of the previous trend. So, working with such chart patterns, we must wait for a breakout, which gives us a clue for the further market movements. Also, this breakout can be used for trading.

I drew the triangle using the swing highs, which were important for the market at that time, from my point of view. If we keep following that version of the pattern, the upper line is a little bit higher - you can see it as a red line. Based on this version, the price broke the bottom line of the triangle, and we got a trend reversal signal. But using this version of the pattern, we can face with false breakouts, like it was in the previous month.

In order to avoid false breakouts, at least try to avoid false signals, we should draw a new version of the triangle. I want to use another bottom line, and it is blue. For me, this new version is more reliable. I want to give the market one more opportunity to prove that sellers really want to push the price lower. Based on the new bottom line of the triangle, the price still is inside the pattern. If the price reverses from this line, the market will be able to keep the sideways movement in the borders of the pattern. For confirming the breakout, we will need to get the daily close price below the triangle. In such case, the trend reversal will be confirmed. The market will be able to reach 9000.00 and 8000.00 levels as the nearest support zones. They will be good targets for sellers.

Let's watch for the price action during the next several days. Let's try to get more signals confirming the type of the triangle and the direction of the further market movement.

And what do you think about the further direction? Please, share your ideas in comments! It will be interesting to see alternative ideas too.
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Comment:

I think we can say now - the price breaks the bottom line of the triangle chart pattern. It give us a bearish signal in the medium term at least. Let's see how buyers will act having such low price for BTC.

Will they buy or prefer to stay away?

Comment:

Interesting market situation. I'm writing a new post about the further market movements. I hope you will be interesting for you.