First of all I would like to mention the fact that I am not a bitcoin trader, I only apply my way of viewing the markets to scan bitcoin and publish charts and more recently write articles here on themerkle.com.
Above I have zoomed in on a weekly logarithmic chart of Bitcoin. This whole formation looks to me like a gigantic falling wedge which in theory should be bullish. However, considering the size of it, I ignore it completely and focus on the trend, which has been down for more than a year. With price back at value, as shown on the chart, and with an oversold Force Index ( which as you can see does a pretty good job on bitcoin too) the time has come to look for shorting opportunities. Lets go over to the daily chart which is where it gets more interesting.
I’ve been bearish on bitcoin since the beginning of March (there are some small red arrows above some candles which show my public ideas on BTC), and as you can see, my accuracy has not been great, but the key is to always be confident and persistent. Now I am bearish again (for the time being), because I believe we just had a buying climax 5 days ago, as shown on the chart. The next day bitcoin got slammed with very high volume, the highest we had in a while. I view today’s price action as a test of the resistance area where the false breakout occurred. The Force Index has been oversold while the longer trend is bearish, so that gives us a shorting opportunity.
If I am right in my analysis, we should see bitcoin fall back inside the 210-220 area where strong support is to be found. I’ve been looking for a long time for the multi year low at 150 to get tested, but it is too soon to look for that level. If you liked this article follow us on twitter @themerklenews and don’t forget to subscribe to our newsletter!