BITCOIN No need to panic. Normal pullback and I've shown you why

17 Feb 2020

I see a lot of Bitcoin buyers/ holders panic with the current 2-day pull back. They shouldn't. This (so far minor) decline is far from alarming. It is still technical so far within the range of the 1D uptrend but now outside of the 1D Channel Up.

This Channel Up is not illustrated on the current chart as I've chosen the 1W time frame to best explain the current situation. If you want to see it in more detail, take a look below:


** Just a rejection and profit taking on the 10,500 Resistance. Nothing alarming after a 2-month uptrend **

I have basically warned about the important of the 10,350 - 10,500 1W Resistance since the beginning of the month. This level is what I've been calling "President Xi's High" (made when China's President made references on Bitcoin and Blockchain). That chart showed clear Support levels on the 0.500 Fibonacci (8200) and 0.618 Fibonacci (7700).

The current study is practically a combination of that chart and the idea below:


** The Fair Value Channel **

That was the popular analysis on Bitcoin's "Fair Value Channel" and how this can lead us smoothly towards the Halving.

On the current study I dig deeper into how this "Fair Value Channel" is affected by the Fibonacci levels provided by June's 13800 top and December's 6500 bottom.


** The smooth path towards the May Halving **
What I did on this study for you is model the current pull back after the previous mid-term pull back followed after June's 13800 top. June's top was made within the 0.618 - 0.786 Fibonacci retracement of the levels provided by the 2018 Bear Cycle (December 2017 19800 top and December 2018 3150 bottom). The pull back that followed made a bottom on the 0.382 Fibonacci retracement. Similarly on the current mini cycle (June's 13800 top and December's 6500 bottom) the current top may have been made just above the 0.618 Fibonacci, with 0.382 (being around 8500) standing out as potential Support. Keep in mind also that the MA20 is also there.


** The Halving's Ascending Triangle **
Practically the green shaded area within the "Fair Value Channel" and between the 0.382 - 0.786 Fibonacci level forms an Ascending Triangle and may well be the pattern that "carries" the price action until May's Halving. As long as we stay within this pattern, Bitcoin is in a neutral, controlled area dominated by buyers who accumulate.

Notice also how every cycle top (December 2017, June 2019 and potentially February 2020) forms the same RSI pattern on the 1W chart (I have noted that with the light blue ellipse): a Double Top, followed by Lower Highs.

Bottom line: This is a perfectly healthy pull back based most likely on the selling pressure of the 10,500 Resistance as most short term traders who bought near the 6500 bottom are taking profits on this 2-month +60% uptrend.

What do you think? Is this a minor technical pull back or can escalate into something worse? Let me know in the comments section!

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** BONUS MATERIAL with related studies: