Hi, friends hope you are well and welcome to the new update on Bitcoin. In my previous article, I shared with you that the priceline of the leading cryptocurrency has broken out the strong rejection line that was the resistance of a very big symmetrical triangle that was started back in 2017. Even though after breaking out this resistance the price action of BTC has already retested the previous resistance of the triangle as support but I was expecting that the price action will re-test this resistance as support again because a big correction rally was still due after this breakout. Finally, the price action has started moving down and so far it has dropped by more than 26%.
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The formation of Head & Shoulder pattern:
Before starting this bearish move the BTC showed a very obvious bearish signal and formed a Head & Shoulder pattern that can be easily seen on the daily chart. After the completion of this bearish reversal pattern so far the price action has even broken down the neckline of this Head and Shoulder formation.
The priceline is being consolidated above 100 SMA:
Since 3rd September 2020, the price action is being consolidated above the 100 simple moving average on the daily chart. If the 100 simple moving average will be broken down then priceline of leading cryptocurrency has the next support of 200 simple moving average at $9100 at the time of writing.
Here I have also placed the moving average convergence divergence (MACD) indicator the momentum indicator and the stochastic oscillator as well. It can be clearly observed that during this consolidation phase the MACD has turned weak bearish from strong bearish. And the stochastic has also entered the oversold zone but sofar the stochastic did not give any bull cross and the momentum indicator is also strong bearish. Once we will receive the bull cross from the stochastic oscillator and the momentum will start turning bullish as the MACD has already started turning bullish then a bullish reversal from this level can be confirmed.
Accumulation above 10K support:
Now if we watch the different support and resistance levels on the daily chart. Then it can be seen that the price action is being consolidated at the $10,000 level. Here the Bitcoin has the 100 simple moving every support as well. Once this support will be broken down then we have the next support at $9,000 and at the same level, we also have the 200 simple moving very strong support as well. But if the price action will have bullish reversal from here then it has the next resistance at $11,000 where the priceline also has the resistance of 50 simple moving average. In case of bullish reversal, a move up to $11,000 will be confirmed. However, the next move up to $12,000 depends on the breaking out of 50 simple moving average and the $11,000 resistance level on the daily chart.
The strong supports of SMAs on the weekly chart:
Now if we switch to the long-term weekly chart then it can be easily seen that the price action has broken out all simple moving averages with the time period of 25, 50, 100, and 200. At this time we have the 25 simple moving average support at almost $9,000 level. Therefore there are strong chances that if the price action will be dropped up to $9,000 then it can have a bullish bounce from this level. In my point of view, the price action can start a move to the upside from the $10,000 support and this move can be up to the $11,000 resistance level. Then it can make another bearish move to $9,000 or lower level to re-test the resistance of the symmetrical triangle on the long-term weekly chart before the next long term bullish move.
Even though in the long-term the price action of Bitcoin is in bullish momentum but in the short time and on mid-term we can expect a correction rally from $10,000 to 8500 dollars (at this time the priceline is already moved down at $10000) before the next bullish move. However, if the indicators on the daily chart turn bullish then we can expect a rally up to $11,000 before the next move to the downside.
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