Bitcoin price action over Christmas, reversal in progress
Last Friday I wrote about the monster drop in Bitcoin and how it was a Christmas gift. So far, this has been playing out nicely.
1. One of the indicators that we would retrace higher was a return to the channel. We did this early on the 23rd and remained inside the channel for the rest of the holiday weekend. In fact, we tested the top of the channel but failed to return to the bottom. What we did see was an upward trendline that continues to push towards the outer resistance arc.
2. That last arc (the blue/purple arc) has been an extremely strong resistance area. The behavior of these arcs are similar to support and resistance lines: if you break a resistance line, it becomes the new support.We can see that behavior over and over inside this Gann Square.
What is more important about this behavior is something that I mentioned in last Friday’s prediction for a bullish breakout: strong movement outside the resistance arc. We even tested back to the arc shortly after the breakout and it showed support. This kind of movement is extremely bullish. If price does not continue to trend up, this turns into a false breakout and the move down will be violent.
3. We can look for price to return to this value area: above 18750 and 20000. We should expect a range trade the closer we get to 20,000 and some consolidation until price reaches the 45 degree angle and performs a breakout above 200000.