The weekly hasn't quite closed yet but wanted to make sure I got an update out for everyone as it's been a month since the last one. The descending triangle that everyone was watching finally broke down, as I've been hinting was likely for the past few months. I won't pretend as if I played it perfectly, I ended up closing a large portion of my shorts from higher up in the $9,000's expecting another bounce up, so when it finally did break down I only had a small short open to catch the move. Still not complaining as my read of the market direction was correct and I have had the majority of my cryptocurrency portfolio in USDT since $10,500 and up so am excited about the upcoming buying opportunities. Where am I looking to buy? Let's look at the charts.
Bitcoin Weekly Chart
The $9,400 weekly support finally gave out after price bounced from it on numerous occasions and the breakdown was pretty ugly. The weekly 21 EMA didn't provide the slightest bounce and how easily it was lost suggests that this may not be a quick recovery. Price tapped the $7700 weekly support which is the last major support before looking to the range lows.
As we can see the weekly chart shows a clearly defined price range from $5,800 to $11,800 and Bitcoin was unable to close above the range highs. If we lose this last support from $7,350 - 7,700 I wouldn't be surprised to see the range lows tested. For now I believe this support holds and am scaling into spot Bitcoin positions between $7,200 and $7,500. If this breaks, I'm expecting $5,800-6,500 and will continue to add to spot positions on the way down.
Support: $7,350 - $7,700
Resistance: Major resistance is at $9,400 - $9,650 but minor resistance lies in the $8,700 - $8,800 range
Bitcoin Daily & The Gold Fractal
On the daily we can see price broke through the 200 EMA with ease before getting a bit of a bounce from the $8,200 level. $8,200 is a level I thought could hold or at least provide a significant bounce and did briefly buy some spot in the area which I later cut when I saw the bounce led to a rejection by the 200 EMA. Bitcoin has now closed three consecutive candles below that $8,200 daily support which to me suggests we're probably not getting a re-test of the breakdown near $9,400 and this dump isn't yet over. My primary target now, which is where I intend to move a large portion of my USDT into BTC lies near $7,200. This is the 0.618 fib retracement of the entire run up, is confluent with the bottom of the last significant weekly support and also the top of the last significant daily support before we start looking at range lows. Furthermore, it also lines up with targets from the gold fractal I mentioned last time around.
This is the Gold (XAU) weekly chart which strongly resembles the Bitcoin daily chart. Here, when XAU lost the $1,500 weekly support that had held for so long there was a massive sell off and price dropped 24.5% from the origin of the breakdown before seeing a meaningful bounce. Price then held that new floor for a long period of time before breaking down again and finding a long-term bottom 33% below the origin of the original breakdown. If Bitcoin were to continue to follow this fractal that would lead to a mid-term bottom around $7,100 and a long-term bottom around $6,300. Coincidentally, from the BTC daily chart above we can see $7,200 is a key daily & weekly level as well as the 0.618 fib. I'm bidding heavy in this level in anticipation of a strong bounce at the least. If that level is lost then $6,300 is the 0.705 fib level of the move up and $5,800 marks the weekly range lows and I'll not only be adding to spot if price gets there, but will be actively deploying fiat as well.
In summary, I don't expect $8,000 to hold for much longer and I'm not sure how likely a significant bounce from here is. The weekly and daily chart scream out $7,200 as an ideal downside target and it's backed by confluence with the weekly gold fractal that has played out identically so far. I intend to convert most of my USDT into BTC between $7,000 and $7,500 and if $7,000 is lost I'll be adding fiat and scaling in more between $5,800 and $6,300 which represent the major support prior to the last breakdown, the weekly range low and again confluence with the long-term bottom from the weekly gold fractal.
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