For a whole week, the price behaved calmly as expected. In the previous analysis, we wrote that recently after a directed movement up or down, the market fades in place. This time nothing new happened. Due to the lack of volumes, buyers stopped the growth which began on 6 February and the price for the week traded in a narrow range of USD 3630-3740. Analyzing horizontal volumes, it is seen that the main liquid zone was formed in the range of USD 3660-3700. There were several attempts to break through this price zone, both up and down. All these attempts ended in flawed breakdowns and a local turnaround of prices:
The current consolidation moves in the falling channel and now the price is at the top of the channel’s trend line. There is also a global falling channel which operates from 4 December 2018:
In fact, buyers have tested the top trend line of the global falling channel. The price has stopped at a critical point and buyers are now deciding the relationship with sellers in a narrow low-volume consolidation. What are the options for price exit from consolidation? The first option is to break through the upper trend line on large volumes and test USD 3850. In our opinion, the current price stop in the liquid zone of USD 3660-3700 is the first test of buyers’ durability. Important decisions will be made in the price zone of USD 3850-3920 and there are several reasons for this:
- Pay attention to how candles look like in this price zone. When the price was falling on 24 November, sellers tried to sell this price zone on large volumes, buyers could fight off an attack and organize a rebound to USD 4480. In the end, this price zone was broken but it did happen either on large volumes which are not currently in the market or in the long tortures in the form of consolidations:
- This is confirmed by horizontal volumes, which show a good liquidity zone, after which practically there are no obstacles up to USD 6200 (the exception is a small liquidity at a price of USD 4200):
- According to the wave analysis, a new wave of growth that began on 8 February may end at a price of USD 3860 if buyers continue to trade in small volumes:
We reviewed the first option of the development of events after breaking the consolidation. Regarding the second option – everything is simple. If buyers can not break the current consolidation up then the price will continue to be traded in the triangle and the next target is USD 3480-3500:
If we are talking about the mood of buyers, they have started to believe in growth. Their marginal positions are beginning to grow:
However, the danger is that the faith of buyers in growth is not supported by volumes. Now the positions of buyers are at a historic high and this situation was before the breakthrough USD 6,000 down.
Sellers are currently more passive in making decisions:
If we look at the weekly timeframe, then it is clear that after trying to update the low, sellers showed weakness and allowed buyers to take the initiative. Therefore, we are more focused on the growth continuation:
In any case, we can only wait and hope that the next week will be more dynamic.
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About the Author: Peter Oleshchuk is a trader and technical analyst. He is studying and analyzing the crypto market for about 2 years.
Image Courtesy: TradingView (charts)