Bitcoin saw a renewed selling pressure today as the price broke through the base of the ascending triangle and headed towards the $8k resistance level I pointed out last week. However, a big question Bitcoin traders are still asking is; “is this a Bearish breakout or simply a price fake-out”.
In this Bitcoin analysis, I will be answering that important question to the best of my ability, I will also be pointing out the important levels to watch out for and the best ways to take advantage of the developing price action.
Confirming The Bearish Move
There are two important things I need to happen before I can confirm this bearish move as a breakout and look to take short positions.
- An Increase in current volume:
A breakout requires a lot of trading volume to occur and push the price out of the triangle. But currently, this bearish move is seeing a very low trading volume. This simply means traders willing to enter sell positions at that current price is very low and the move might not follow through.
So, it is important you keep an eye on that volume indicator and wait to see more sellers enter into the market before making a decision and taking up any position to the downside.
- The Break of $8,632 Support:
The second important thing I want to occur to support my bearish bias on Bitcoin is the break of the $8k support region.
The $8k support is a very important level to watch out for and a break of this level will confirm the bearish move to the downside.
If this level gives way, we could potentially see price fall rapidly towards the $7k resistance level. This level held price on numerous occasions and might serve as strong support for the falling Bitcoin price.
However, if this $7k level gives way, we could see the price fall even lower to the $6k region.
Is This a Change in Trend?
No, this is not a change in trend as the overall Bitcoin market is still very bullish and we are only seeing a short term retracement.
Even if this bitcoin analysis bearish scenario plays out, we are only experiencing a short term market weakness and a pullback, but we can expect the bullish run to resume once this is over.
But for me to even be interested in this bearish move, I must first see price break through the $8k region and then see more sellers come into the market. Till then, I stand aside and wait.
To gain more information and learn how to trade this cryptocurrency and become consistently profitable, you can read my How To Trade Bitcoin Guide. You can also check my top list of Best Bitcoin Exchanges To Trade With.