Bitcoin printed a big 7.25% gain from the bottom up to the $81K horizontal resistance on Wednesday – a monetary increase of $5,500. However, once the $BTC price hit the important $81K resistance a rejection took place. With the failure to make a higher high, could Bitcoin go on to make a lower low in this next down-leg?
Resistance hit: consolidation or down-leg next?
Source: TradingView
Even though the $BTC price found strong resistance at $81K, Wednesday’s surge, as the U.S. midterm elections resulted in a hugely favourable win for the Democrats, was as strong as it was unexpected. However, as predicted by Crypto Daily, the W pattern played out and the $BTC price was buoyed up all the way to the intersection of the two parallel channels .
With all short-term momentum indicators now looking spent, either a period of consolidation, or a corrective down-leg are the two favourite scenarios. If a consolidatory phase becomes the preferred option, a bull flag setup could start to form. It’s still early to make this prediction, but it could already be taking shape. The bulls will want the Stochastic RSI indicator lines to come down quickly while the price action chops sideways and downward, painting in the rest of the flag.
A lower low or a higher high?
Source: TradingView
It is true that ever since this rally out of the bear market hit the $87K local high, a downward procession of lower highs has taken place. On the other hand, and this is the more important macro perspective, the upward rally has put in higher lows . Therefore, at some point, either the bulls or the bears are going to have to make way. The fairly insignificant looking potential little bull flag structure becomes key. If it does play out, the first higher high should be made, while if it breaks down, a lower low could lead to more significant downside.
A new bull market is taking shape
Source: TradingView
Here in the weekly chart it does rather look like the $BTC price is basing at the $75K horizontal support level , with closing candle bodies sitting higher up at $77K . Looking all the way left along the chart we find ourselves back at the huge 8-month long bull flag of the previous bull market. The very top of this bull flag is providing huge support to the current price action, and it is not expected that the price will fall below this.
Some are saying that the current corrective phase is still too shallow, especially compared with previous bear markets, but having not long escaped from the last bear market, and with the bull market trendline rising, there isn’t a lot of room for too much more downside.
Also, look at how the 50-week SMA provided support for the previous bull market. If this first test of this moving average is successful, expect the 50-week SMA to continue to provide support going forward. The new bull market is already taking shape.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
