Bitcoin has been trending down this week and is showing a huge red candlestick.

The total crypto market cap has been suffering from an extensive decline as it is hovering around at $326 Billion right now and is roughly down $146 Billion from this month’s top, which was $472 Billion.

This is affecting bitcoin’s market cap as well, and causing volume to diminish.

The weekly chart

When we take a look at the weekly chart and zoom out a bit we start seeing that it has been slowly forming a huge symmetrical triangle pattern. The price has been respecting the upper trend line and the lower trend line of the pattern. This pattern often signals continuation, rather than reversal. In this case, it can be considered as a bullish pattern.

The Volume

The Volume is playing a very major role in this setup as when the price is starting to extend in the direction of the peak, volume should start diminishing. This happens because people are uncertain where the price is going to move next and likely not to take any risks. When the volume starts diminishing, it’s preparing for a breakout either way and once it happens, then you should know that this pattern is, signaled by it’s “explosive” breakouts.

The 4 Hour Chart

It’s forming a bullish regular divergence which is indicating a potential reversal.

Divergence is supported by the RSI and Stoch indicators. To be valid, it’s necessary to wait until it starts to show increased volume and breaks the local top ($7,600). These are good signals, indicating that the price wants to push higher. If the bearish momentum keeps intact then it is a good chance to test again 0.786 and $7,200 – $7,100 support zone and see where it moves from there.

Conclusion

This is the time when it’s better to wait until it starts forming a solid bottom and showing bullish / reversal signals before entering. The next week is going to be important to show whether the price is going to push lower. If it does, then it should be expected to retest uptrend line + support zone at $7,000 and $6,700 area.

DISCLAIMER:

Please be aware this is not financial advice. You are responsible for your trading and investing decisions. It is highly recommended to do your own research before investing anything.

About me:

I’m a full time crypto trader and blockchain startup investor. I like to talk about trading strategies and insert educational information on my reports. I tend to discuss about small cap gems with my crew.

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Lesson 1 – Beginner’s Guide: How to use Moving Averages to Day Trade?

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