It certainly looks as if we are favoring the downside, at least as things stand right now.
The Bitcoin market initially tried to rally a bit during the trading session on Monday as the trading world got back to work. Bitcoin continues to hear a lot of noise overall, and some are even out there suggesting that the fact that Donald Trump thought that Bitcoin was a bit of a scam is part of why the market dropped. That is all nonsense of course, because it comes down to volatility more than anything else.
The market has been very noisy as of late, and as you can see, we had broken down significantly over the course of the last month or so before forming the symmetric triangle in which we are currently trading back and forth. As the $35,000 level was tested during the trading session, it appears that there is a significant amount of support. The uptrend line of the triangle is offering support so far, but if we break down below the bottom of this uptrend line, I think it is very likely that we could go looking towards the $30,000 level.
Looking at this chart, you can see that the 200-day EMA is currently slicing through the middle of the candlestick that we are forming for the session, and it is flat. Those are two things that tell me the market is not ready to go higher, at least not for a bigger move. If we were to break down below the $30,000 level, that could open up a huge move lower, at least down to the $20,000 level. Breaking down below that then puts us into a bit of a “black hole.”
To the upside, if we were to break above the top of the downtrend line and, perhaps more importantly, the $40,000 level, then it is likely that we could go looking towards the 50-day EMA above which is sitting at the $46,000 region. After that, the market could very well go looking towards the $50,000 level. While I do not know where we would go next, it certainly looks as if we are favoring the downside, at least as things stand right now. As far as buying is concerned, I would need to see a daily close above that $40,000 level. If we get a breakdown, I will be much more quickly convinced that selling might be the way to go.