Bitcoin consolidation continues
Trading ranges continue to constrict and extend. While there is no clear breakout signal yet, there is some evidence that prices may retrace a bit before moving higher.
Bitcoin holds 7500
Bitcoin has done a phenomenal job of holding above the key 7500 value area, specifically the 3/8th Major Harmonic of 7562.13. There have been multiple attempts to push price below this zone, the first incident happening on May 16th – which saw Bitcoin flash crash down to 6600 before quickly recovering above 7500. The second attempt to push price below 7500 occurred between May 22nd and May 23rd (today). It is important that traders spend a considerable amount of time in this area. We need to see bulls and bears fight it out at this level to build a strong volume profile – maybe even created a new point of control. Currently, there is a high volume node at 7900. The next high volume node below is at 7414 – but the point of control still resides at 6400. I am looking very closely at a break of the 8300 value area which would put price above the closest high volume node and see price rise fairly consistently with little resistance until 12000. However, I would anticipate a push lower.
Mirrored Foldback Pattern
The image above shows a series of black hash marks, these hash marks represent prior price action that Bitcoin has already made and then ‘mirrored’ (flipped 180-degrees) into the future. The current chart has existed since December 17th, 2018. What you see is known as a ‘mirrored foldback’. The theory behind this kind of pattern is that price repeats the same structure has it has in the past. I am not talking bout the exact same time or price levels, but the same structure. We are looking for the same kind of moves and swings that have occurred in the past. Now, nothing moves as perfectly as you would like and there are always going to be some divergences to the foldback, but the current pattern is playing out very nicely. But I want to show a more zoomed in image that may signify some downside pressure in the near future.
We can see in the image above that Bitcoin has maintained its current structure and swing relationship to the foldback pattern. If that is true, then we should expect price to respect that pattern. That means that in the very near future we could see price experience a fairly strong drop lower. How far? A drop below the current Gann Arc would put price into a drop down to the next arc which is around the 6200 to 6400 value area. Now, it is possible that the past 4 days of movement have fulfilled the swing low structure – but that would mean we have a fairly protracted consolidation period that would exist into early July. The trading range for this event would be between 8200 and 7200. A breakout would probably not occur until mid to late July.