Since a high of $304 on January 26th, Bitcoin prices have fallen 29%. Currently Bitcoin trades as $221 on BTC-E. On January 24th, 2 days before the intermediate high, we wrote how micro trends with certain candle stick formations signaled an upcoming spike. This time, the sharp decline signals that the market is on its way to be squeezed down to the breakout area.
The top 3 positions on tradingview are all SHORT positions.
The user MoonTrader, suggests that
We have a large downward channel acting as the top of a descending triangle that will take us to the low $200s. We had a failed H&S that took us to $245 where we were stopped by the lower end of the breakout zone before the big parabolic move.
A Head and Shoulder pattern is a term used to describe a stock following the below events:
1. It rises to a peak and subsequently declines.
2. Then, the price rises above the former peak and again declines.
3. And finally, rises again, but not to the second peak, and declines once more.
According to investopedia:
The “head-and-shoulders” pattern is believed to be one of the most reliable trend-reversal patterns.
When we talk about trend reversals we must take into account the time frame that we are referring too. If we look at a 1 year char, a trend reversal has already shown itself a few weeks ago. However, when we look at the 2 week mark, it may see as if the upward pressure has disappeared and in its place a sleuth of bears has appeared.
Furthermore, do not dismiss the possibility that the price may dive under this year’s low which was $162 on January 14th. We are in the despair phase after China’s bubble. Fear and panic might intermittently drive the price below the $200 mark.
If that doesn’t hold, then we could see a flash crash to $86 followed by a very slow crawl upward/sideways for a long time. At the current rate, I’m sad to say it doesn’t look like we will see a swift recovery. It may still recover, but may take longer than we expect. -MoonTrader
Recent Media Coverage
Recently, the mainstream has seemed to pickup on Bitcoin. With Coinbase opening the world’s first regulated Bitcoin exchange it looks like established news sites are validating that Bitcoin is here to stay. Bill Gates has recently done an AMA on reddit about Bitcoin, and Ashton Kutcher retweeted about BitGo, a Bitcoin Security API.
— Bitcoin Magazine (@BitcoinMagazine) January 29, 2015
Despite the positivity in the media, it seems that currently the bears are in control of the market. The most popular positions for traders are currently SHORT positions. As a disclaimer remember to do your own research before making any kind of investment decision, do not solely rely on our coverage. If you liked this article follow us on twitter @btc_feed and make sure to subscribe to our newsletter!