On to the analysis…
Because the price of bitcoin has been bouncing off the so perfectly, I felt it was necessary to make note of this.
There are 2 main resistance lines that are both very important for potential price reversal:
1.) The minor resistance line is the purple line formed from 17k down to 11.7k and while this line was clearly pierced between March 1st-March 7th it has remained a viable resistance line as we recently witnessed the price touch 9.8k before falling to where we are now. This is the we will focus on first if BTC makes a rally up overnight.
2.) The Major resistance line is the red line formed from the ATH of 19.6k down to 17k. This forms a strong resistance as BTC touched it recently (at 11.7k) before falling down hard.
If we can cut through the purple resistance line, this red line is our next target.
As for support, I also have 2 main trend lines:
1.) The minor support line is the black line formed from 3.4k (Sept. 15th) to 7k (Feb. 6th). You probably noticed that this black line appears to cut right through the candles on Feb 5/6 but on the this is actually right at the bottom of the candle body (with Heikin Ashi candles).
It doesn’t seem to be too much of a coincidence that we saw the price of BTC touch this line 3 times recently on the 8th, 9th , and 10th of March AFTER the line was drawn.
So this is the area I will be keeping a close eye on for bitcoin to potentially stop and reverse back up, which I have both circled in yellow.
2.) Finally, we have the major support line which is the bright green line from 2.8k (lowest point on Sept. 15th) to 6k (lowest point on Feb. 6th). We have yet to see Bitcoin touch this support line since the low in February and this could serve as a great reversal point. This point at 7.3k also happens to fall right on the .236 level. I expect bitcoin to bounce off this price by the end of the week.
After this, it is possible we continue further down and form a with the Feb 6th low, but for now I will watch these local levels before the next assessment.
Bitcoin has broken the local support trend line (in black) and is now in the process of dropping below the .382 fibonacci retracement. If bitcoin holds under the .382 fib, the next target is at the .236 fib level or the major support trend line (in green), whichever comes first. I still believe we will reach these levels right at the point of convergence as you can see in the chart above and possibly see a bounce back up. However, it is unlikely the bounce will bring us to the major resistance line (in red), but more likely we bounce off the purple resistance line. For now, let's just keep an eye on our targets and trade only on strong reversal signals.
Our first obstacle coming up is the black support line which has been formed on the bottom of the candle bodies using the daily time frame. This support line also happens to be intersected by the .50 fib level. I expect Bitcoin to hit this area around 8.8k and then dip back down to the .382 fib area.
We are approaching the very end of this wedge where the support and resistance converge. So keep a very close eye on the price over the next 5 days because this could go either way from here.
If it is able to close above the black trend line, we still have the purple resistance line right above it which has been very difficult for Bitcoin to pierce since December.
The RSI is also quickly approaching overbought condition, so we should expect to see a dip soon.
Stay tuned folks