Boredom reigns as regards the bitcoin price, as sideways and downwards movement enters its seventh week.
Volatility will come
Could it be that it is just because it’s crypto that investors get so bored so quickly? If it were a major stock on the S&P, such price action would be taken as perfectly normal and nothing to get vexed about.
However, in the world of crypto, investors are used to the volatility that cryptocurrencies usually provide, and even though bitcoin is easily the biggest of the cryptocurrencies, it still retains the ability to shoot up or down with a fair measure of velocity.
From a charting perspective moving sideways and downwards suggests a descending channel, which is a bullish formation. If this channel initiates after a spike to the upside, it becomes a bull flag – an even more bullish chart pattern.
Three major supports await
It might appear to be one of the less perfect bull flags, given that both candle bodies and wicks have on occasion escaped to the upside, before being drawn back into the channel, but a bull flag it still remains.
Look for volatility to come back as this bitcoin bull flag slowly approaches the point when it really needs to break, with three major supports waiting.
Support number one is the 0.618 Fibonacci for this latest move, followed by support two, in the form of the upwards trendline from the beginning of the year, and finally support three which is the 200-day moving average.
Bitcoin is converging towards all three of these supports and therefore something has to give. The fact that it is in a bull flag would certainly give a lot more confidence to the bulls.
Expect the unexpected
However, from a trading perspective, it might appear just too easy for bitcoin to reach the supports and then make the expected surge to the upside. Trading generally doesn’t follow the expectations of the herd.
Therefore there probably needs to be some kind of divergence from the script, and this might mean that bitcoin gets sent skyward before reaching the support, or it could fall through support before reversing back up.
Many other scenarios can also be taken into account. Whatever happens, traders should keep their wits about them.
For those who aren’t watching the lower time frame charts, if bitcoin dips it might just be an excellent time to enter the market or buy more. However, all should follow a comprehensive risk management process and perhaps take expert advice. Trade carefully.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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