Tuesday Inferno market report

TL;DR wait for it…

There are times when nothing much seems to happen in the Bitcoin market. Price action can drift sideways fo r days or weeks, bizarrely calm for a currency with the reputation for volatility that Bitcoin has. But then it happens: the resolution. And when it comes, it’s nothing short of spectacular.

We believe that this will be the case for bitcoin in the coming days or, possibly, weeks. The move, when it comes, could be shocking — one way or another.

Right now, bitcoin appears to be carving out a descending triangle. We’re going to look at this in more detail tomorrow, but suffice to say that support around $9,200 has held for many weeks, while bitcoin has posted a series of lower highs. That triangle has to resolve soon, since the downward slope will soon meet the base support line. That must happen by mid-October, though most triangles break out long before their endpoint — often by two-thirds of the way along, which is where we are now.

Assuming this is a descending triangle, there are three possibilities:

• Break up. That could see a retest of the $13,880 high, but at this point, it seems like the less-likely scenario.
• Break down. The more likely scenario for a descending triangle, and could see $6,000 again — our long-term support line.
• Drift sideways. Possible, of course, though seems highly unlikely given the levels of interest in bitcoin and the anticipation of something big happening soon.

Veteran trader Peter Brandt has pointed out this pattern, with a disclaimer — which we at Inferno share. ‘In full disclosure, I must inform you that I am long BTC as a position trader. Yet, as a swing trader I must respect classical charting principles. This descending triangle is NOT a descending triangle until it is completed.’

In other words, Brandt believes the overall trend is up (position trading seeks to profit from the long-term trend), but the reality of technical analysis is that a break downwards is more likely at this point than upwards (i.e. a bearish swing trade).

To summarise, BTC is in a macro uptrend. However, in the short-term, we can expect heavy volatility. Price could go either way, though technical analysis principles hint at the greater likelihood of downwards first before the resumption of the bull market.

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