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Bitcoin bulls lose 29,500, is the run over?

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Commentaries & Views

According to the daily chart below, Bitcoin bears have finally broken prices down from the consolidation box. Notable still is that momentum is already deeply oversold with a major catalyst – in tomorrow’s FOMC meeting, just around the corner.

The conditions are ripe for bears to take the price down to the upward trendline and 200-day MA. Prudent traders holding long from 25k still have a chance to make some profit. That said, I also think the current setup is extremely conducive to producing a "wick out" on the weekly timeframe. A wick out refers to a scary break from a consolidation zone followed by an immediate reversal, resulting in a long candlestick wick which usually becomes a hammer candle, the type of event that can catch bulls and bears both on the wrong side.

The below-left side is an example of a "wick out" (thus far) on the weekly timeframe in a publicly traded security, and the Bitcoin weekly chart is on the right. The consolidation patterns are very different, but the principle of the wick out is the same, and I can see it happening on this week’s candle in Bitcoin.

Thanks, and good luck.

By

Jonathan Da Silva

Contributing to kitco.com

Contact jdasilva@kitco.com
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