Bitcoin — in a Rising wedge or Ascending triangle?
7th April market analysis of Bitcoin
Good morning folks! On a positive note, the flattening of the coronavirus curve has begun for most of the countries except for a few. The heads of these few countries were ignorant from the very beginning and now they are paying the price for it, including the Prime Minister of UK, Boris Johnson whose fight with coronavirus has become rather personal. When the world is seeming to heal from the virus rampage, almost all markets are beginning to tread the path of recovery as well(DOW was up 7.79% yesterday).
So the burning question is whether Bitcoin has passed the acid test of coronavirus or not. AND it seems to be doing well till now. Dow is up by ~21% since the crash whereas Bitcoin has almost doubled its value but it is evident from Peter Schiff’s words below that he is in no mood to agree with us.
But without further ado, let’s move to our daily analysis. According to the following twitter user, Bitcoin has started to form a rising wedge and it has a significant chance of breaking in the downward direction. Bitcoin’s massive March nosedive and strong resistance at $7000 — $7200 range almost convinced everyone that it is forming an ascending triangle(an indication of a bullish move). But instead, as the days are progressing, we can see that Bitcoin is forming a rising wedge where “both the resistance line and the support line are rising — and the support line is rising faster than the resistance line”. “Rising wedge” is not particularly a bullish pattern and often breaks in the downward direction. A rising wedge typically forms during a “reaction rally” following a significant downtrend. Because of that, it often results in a downward breakout and is a continuation of the previous downtrend — which exactly is the case here.
Another way to differentiate between an ascending triangle and a rising wedge is by using volume analysis. Ascending triangles should exhibit a higher volume on the up-swings and rising wedges should exhibit higher volume on the down-swings. In this case, if we were in an ascending triangle the volume should have shown an increase at the breakout but it did not when we broke $7200.
Another bearish case was presented by macroeconomist Henrik Zeberg using Elliot wave theory, according to which we might see $1000 as the next bottom even though $1000 seems a bit too inclined on the pessimistic side. In the tweet below, he is showing the corrective wave which normally has three distinct price movements — two in the direction of the main correction (A and C) and one against it (B). According to the chart, we are in a multi-year corrective wave(downward correction from the $20,000 top).
In Elliot wave theory, waves A and C move in the direction of the trend. Wave B, in contrast, is counter-trend(which took us to $13,000). Now we can expect the wave C ending somewhere below $3,000 as wave C takes the price below wave A which was ~ $3,100.
With all the bearish scenarios taken into account, the following tweet can give us some relief. Hurray!
Somewhere else in the CryptoCompare forum, the Tether theory seems to save the day for all of us.
“I still stand by my prediction from 10 days ago, that we will see the $8ks during the month of April (Tether-willing), although dip back into the upper $6ks could happen first.
Another 120 million fresh USDT today, 6.35B in circulation and growing every day. 2 billion minted in less than 2 months. In Tether I trust. Good luck to all.” — By CryptoMinnow, one of the forum’s most prominent users.
Another rising wedge theory from CryptoCompare, where forum’s user SunnySalad proposes that the rising wedge pattern is going to continue till it touches the base of the previous triangle which was formed during Bitcoin’s previous rally to $10,500.
The predicted levels to short according to him are the following:
($7,300-$7,400), ($7,800), ($8,200-$8,300)
According to the following Reddit post, a volcano is going to explode after the halving event. You might want to go through the link to understand what the realistic timeframe for the halving event might be to have an effect on Bitcoin pricing.
Thousands of BTCs moved between wallets in the past few hours! Be sure to read the fun comments!
In the meantime, Charles Hoskinson announced “Cardano Will Become Best Cryptocurrency in the World!” — Do you agree? Let us know in the comments section below!
Some more positive analysis coming in from TradingView folks- the formation of an ascending channel on 4hr chart and also the MA1000 analysis which can start a new bull run.
The chart below shows how a break of MA1000 in the upward direction around the same time last year started an uptrend which had taken us to $13,500. Currently, Bitcoin is again touching MA1000(1D chart). Will it take us to the moon? Only time can tell, in the meantime, us traders should take every possible scenario into consideration.
The below chart shows how an ascending channel was forming on the 4hr chart and that we have already broken above it. At the time of writing, the price is exactly at the buy zone according to the author of the post.
Further reading:
Aaaaand its a wrap!!!! You will hear from us again tomorrow! Till then don’t forget to subscribe to our newsletter. Keep learning and keep sharing things with us in the comments section below.
