The most important thing I am looking for in this market is for buyers to step in on a dip and to hold a strong level as support. We’re sitting right on that zone.

 

 

Supportive buying is the kind of key price action that Bitcoin bulls want to see: big buying on the first pullback of the corrective move higher. There is significant resistance that traders will need to break in order for prices to trade above the 7100 value area. The 50% Fibonacci price level of 7058 is between the price ranges of 8407 and 5709. Additionally, the 6/8th inner harmonic price level of 6932 is also represented in this value area. The true danger here is the formation of a bear flag. The upper band of this bear flag is also at the 7100-value area. If prices are unable to hold above the short-term uptrend line, then traders need to be aware of a very likely break of the 6800-support level. The lower band of the bear flag rests at 6300. If price returns to that area, then a dangerous scenario is at play: the formation of a right shoulder in a head-and-shoulder pattern. A very swift break below 6000 and possibly the 5800 would likely happen.

For a very strong bullish conviction, prices would need to pierce and hold above the current bear flag channel. But even if prices do trade above that channel, which is above the 7200-value area, very soon after that break the key Major Harmonic level of 7562 is up ahead, which will more than likely act as a strong resistance zone. The ultimate bullish scenario for a key change in trend for Bitcoin is for a great than 15% move above the 7000-value zone. Historically, Bitcoin has created such moves prior to beginning a new rally phase. Traders should also be aware that the closer we get to late September and the month of October, the higher the probability of a new bull phase beginning. Many pundits and cryptocurrency experts still maintain that Bitcoin could reach between 40,000 and 80,000 by the end of the year. As absurd as that sounds, Bitcoin did trade from 2,000 in early August of 2017 to just shy of 20,000 by mid-December of 2017.

Again, the most important behavior we need to see is the 6800 – 7000 value area hold with buyers stepping in to support the price action. Anything less is going to prove we are still moving down.