Bitcoin fails first support, now testing second
Price has fallen through the first support level of the bullish pennant. One final support level remains.
First support angle of the Bullish Pennant tested
Between yesterday (August 28th, 2019) and today (August 29th, 2019) Bitcoin moved lower by more than -7%. The percentage of the move itself is not as important as the important levels on the technical charts. The image above shows the bullish pennant that has existed for the nearly the entire Summer of 2019; starting at the 2019 high of 13868.44 on June 26th, 2019. From that date, Bitcoin has continued to make new lower highs and new higher lows. The first bottom trend line is drawn from candlestick body to candlestick body whereas the second is drawn from the traditional wick to wick. The body to body trend line is drawn from the July 17th open at 9071 to the July 28th open of 9108.88. That level has held as a strong support level. From July 28th, Bitcoin has not closed below that trend line. In fact, that trend has only been tested three time since July 28th – the first two instances occurred on the 29th and 30th of July. The third test occurred on August 15th. This support level held for 31 trading days and unless something changes before the daily close for today, this support level will be broken.
As bearish as that event is, there remains one more support level on the chart, and that is the final trend line drawn from the on July 17th and July 28th. At the present, this second trend line is roughly 300 points below the trend line above, sitting around the 9200-value area. The question we should ask is: if price were to move and close below the second trend line, how far would price go? There are three primary Fibonacci levels that Bitcoin would more than likely retrace to. First is the 38.2% level at 8052.58. This level is just below the 2/8th inner harmonic at 8192.22 which is a powerful natural pivot. This is also the next high volume node directly below the high volume node at 10500. The next Fibonacci level (and most likely level) is the 50% Fibonacci level at 6810. But there is almost no traded volume at this level, so we should assume that very little to no support would be found it price reaches this level. Which would mean the third Fibonacci level, the 61.8% level at 5757.73 would be the next major level. I Would expect price to actually dip just below the 61.8% level to test the 5200 value area – which is another high volume node. But in order for price to move from the 8000 value area to the 5200 value area, we would need to see a clear break of that 38.2 Fibonacci retracement level, along with a break of that 8000 node. If 8052.58 does not hold, then we should expect a very massive and swift move to 5200 because there is such a desert of volume between 7800 and 5200. But this is all contingent on Bitcoin moving out of the current bullish pennant. Time will tell which direction this marker will move as we transition into September and the end of Summer.