The steel wall that was the support at $6000 USD has fallen and unless price quickly recovers the notorious ascending triangle will have decisively broken to the downside. I discussed both the upside and downside scenarios here previously but let's take a closer look at today's move and what can be expected going forward.
Bitcoin's price has been contained to this singular range defined by a weekly breaker since June 2018 and only briefly broke to the upside at the end of July 2018, though price never managed to close above the $7800 resistance level in red. Likewise, the bottom of this range at $5866 has acted as an unbreakable line of support since November 2017. Until today.
If Bitcoin does not regain this level in the next two weekly closes it will have firmly lost the range, the 100 week moving average and the 0.705 fib retracement level. To make matters worse, I expect all of these to firmly turn to resistance after having acted as support for so long.
Now that does not mean that Bitcoin or cryptocurrencies are dead by any means. This downside scenario was covered in my prior Bitcoin Market Update and anyone who has been paying attention should have had a plan for any scenario. If you didn't have a plan consider doing the following:
Let the dust settle until at least the weekly close, ideally the following weekly close before making any big moves
Evaluate altcoin positions and consider reducing exposure in order to reduce risk profile
If Bitcoin does manage to regain this range then there's not too much to worry about and depending on the fashion it accomplishes this, it could even be bullish. But what if it fails to regain these levels and proceeds further down?
If the weekly swing low of $5511 is lost, the most likely scenario is that Bitcoin tests the monthly support range, represented by the green box, which spans from roughly $4200-4600 and has confluence with the 0.786 fibonacci retracement level. There are some key swing highs and lows before that level is hit but this is the most significant level in my opinion and I won't be looking for long-term entries within this gap.
This is a rough day for Bitcoin bulls and may well put to rest the long scrutinized descending triangle. The key right now is to give this time to settle and not rush into anything. From an investor standpoint, I'm not interested in Bitcoin unless it regains the previously discussed range or finds support in the $4200-$4800 support range. From a trader standpoint, this has the potential to be a major support-resistance flip and shorts in the $ 5750-6100 are a high probability play if Bitcoin gets there.
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