Hi traders, lets talk Bitcoin.
As I suspected in my last article Bitcoin had a bit of a sell-off, erasing almost 3 weeks of gains in a matter of a day and producing its 5th lower high this year.
The price of Bitcoin is almost back to the base of that huge descending triangle which, according to Bulkowski, is a highly significant pattern that foreshadows a downward breakdown 64% of the time in traditional markets.
To add to the bearish outlook, the weekly has started to form a bullish three-line strike.
This rare pattern is, still according to Bulkowski, actually a bearish pattern which statistical significance: 65% chance of a reversal in traditional markets:
The last instance of a complete three-line strike happened back in March 2018 as the price of Bitcoin failed to breakout after double-topping at around $12k.
However, the pattern back then was clearly much better drawn than the current one which tells us that it might take until the end of this week to assess whether or not the current forming pattern will actually turn into a three-line strike.
Regardless, keep in mind that we're also moving into a larger bearish descending triangle which is a statistically significant pattern in its own right. This tells us that statistically you should expect the market to break down below $6k to go tag a zone of low volume, like $5k.
On the (least probable but not impossible) bullish side, it's possible that the current drop simply constitute a second higher low from $5700.
Since there are clearly 2 ways to look at the chart, we shall go with probabilities here and assume that Bitcoin will breakdown below $6000 or at least retest there and consolidate around that mark further into October and SEC's much anticipated CBOE's decision.
With that in mind, trade accordingly.
PS: Just for fun, this is what the price action looks like if you put the chart on its head:
...see what I see here?
Until next time,
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