Bitcoin Trading: Price Analysis for 4/19

What’s up traders,

It’s Sunday, but bitcoin doesn’t rest, so let’s get into it and look at this triangle:

Bitcoin Triangle

Bitcoin Triangle

Currently bitcoin is tightening it’s range in this triangle. This formation occurs when price makes higher lows and lower highs in a range and signifies that range is compressing and getting ready for a powerful breakout. Bitcoin has been a bit wierd lately. The last chart pattern, the bear flag we talked about 2 days ago, did a couple fakeouts before returning to baseline. Price is potentially gearing up for a big move. As for what direction we are headed, we can’t be too sure until we break down this price action further on a 15 minute chart:

Bitcoin intraday levels

Bitcoin intraday levels

As we break it down, we see some resistance confluence at the top end of this pyramid. Confluence is basically when you have multiple reasons come together to form a decision. Here, price is at the top of the triangle as well as it is approaching an intraday resistance level which may signal that price is going to dip back down into the triangle. We have to be wary of seeing price breaking out of this triangle and resistance would lead to a move to 230.

A basic law of the markets is that the longer price contracts and consolidates, the bigger the breakout will be when it eventually does. This is because at consolidations, buyers and sellers are an agreement between price, and the longer price stays at a certain level, the more transactions can be made. The more transactions that can be made at a certain price level is going to pair more and more people with the wrong side of the trade, so that when the market does breakout into one direction, there will be a lot more traders with losing positions and a lot more panic and volatility as traders scramble to relieve themselves of their underwater positions. By mapping out our charts like this we can see the key levels that may result in momentum shifting to one side.

One last thing:

Bitcoin Monthly Key Levels

Bitcoin Monthly Key Levels

Here is an explaination of why price has found a sticking point at the 224 level. You notice how the body of the candles for both January and February rest at 225. Now we are back here again. One huge tenant of trading is that the higher the timeframe you are dealing with, the more significant of a level it is. We can see everything that we have talked about in this article is proven in the 3 monthly candles in late 2014. For 3 months strait, price rested on that 230 level, ultimately snapping and moving drastically lower. This is a first hand look at how 1. Higher time frame levels are very significant in price and 2. The longer price spends testing a level, the more volatile of a reaction it will see.

Now, in April 2015, we are in the same situation and the monthly candle is testing a significant price level for the third time. I can’t say for sure just yet where price is going, but in knowing the higher time frame analysis and keeping our eye on intraday level for clues, we empower ourselves to be in a position to catch a huge move.

Let’s catch that huge move,

Good luck, good trading