If you’re a short-term bear, you might like this Technically Speaking article for today. If you’re a short-term bull, you’ll likely hate it.
The image below is Bitcoin’s ($BTC.X) daily candlestick chart with a triangle pattern known as a Descending Triangle. The Descending Triangle is an inherently bearish pattern. Bitcoin is at a make-or-break point within this pattern.
Some behaviors that are very common with all triangle patterns are these:
- The breakout often occurs in the final third of the triangle.
- Volume typically falls before the breakout.
#2 is sometimes hard to gauge because not all exchanges show the same volume. However, TradingView has its own Bitcoin Index chart that aggregates volume from the largest exchanges and doesn’t show a major change in overall volume.
#1, however, is definitely present – Bitcoin is well within the final third of the descending triangle.
What may be of concern for any short-term bulls is how similar this pattern is on the daily chart to two other instances where Bitcoin had its final down drive before leveling off and reversing:
The triangle from 2018 that resulted in the big drop in mid-November 2018:
The end of the post-Mt. Gox triangle in late 2014 that extended in 2015 before collapsing in January 2015:
Does this mean that history will repeat itself again? Hard to say. But if you look at any of the recent Technically Speaking articles, you’ll know that we’ve identified significant oversold conditions and historical all-time lows found in key oscillators.
But buyers have failed to show up and support Bitcoin in any meaningful way.
It’s an extremely volatile area and one that should be watched very closely.
Sometimes the best thing to do is the hardest thing to do: wait and watch. 🐳