Last week, after a devastating move that shook the market violently up and down for a 7% move in just a few short minutes, bitcoin saw a major sign of strength as it proceeded to have a slow, but steady markup where it managed to establish a local high in the $6,800s:
Figure 1: BTC-USD, Hourly Candles, Shakeout Prior to Markup
This shakeout forced the market to temporarily establish a new monthly low in what could be argued to be a stop-hunt prior to the move to the $6,800s. Sitting atop its most recent rally is what appears to be a reaccumulation trading range shown below:
Figure 2: BTC-USD, 15-Minute Candles, Reaccumulation Trading Range
While it’s still early to tell, the current consolidation has some of the hallmarks of a classic reaccumulation trading range that, if realized, will likely lead to a continuation to the upside.
Currently, the market is rebounding from what appears to be a “spring” or a “shakeout” — an effort to create liquidity for large players. Part of the alleged shakeout includes testing prior resistance to see if it can properly hold as support. And, as you can see below, the spring tested the previous high and is currently holding support — a good sign for the bulls:
Figure 3: BTC-USD, Hourly Candles, Spring Testing Resistance Turned Support
So where does that leave us? While it is pure speculation at this point, if we see a strong round of buying, the first immediate test would take us to the top of the current trading range to test the $6,800s again. If the reaccumulation trading range proves to properly consolidate, a break to the upside is expected that will surely have us testing our macro descending trendline:
Figure 4: BTC-USD, 12-Hour Candles, Macro Descending Trendline
If we manage to make it to the descending trendline, this will mark our fifth test of supply along that boundary. This is a potentially trend-changing signal that could pave the way through the woods and lead us out of the bear market.
While several major coins are seeing massive gains, bitcoin is still playing possum; it will continue to do so until this descending trendline is broken. The macro trend is slightly leaning bullish as the total volume is consolidating and, as we have seen in the past, several large coins (see previous ETH-USD Market Analysis) have begun to set records in volume in what could potentially be a macro bottom.
As always, this is pure speculation, but it is a scenario that I feel is entirely possible. We will have to play it day by day and see how the trend interacts with the descending trendline. If we see a definitive break of that trendline, I fully expect to see a large swell of buying interest hit the market as the larger investors regain confidence in a potential bull market.
Summary:After a violent shakeout, bitcoin managed to climb for several days until it ultimately made a local high in the $6,800s.
There is a strong argument that the current bitcoin consolidation is a reaccumulation trading range and could lead to a potential continuation of the uptrend.
If we break to the top side of the trading range, we can expect to test the macro descending trendline. From there, we will have to reevaluate the market.
If we manage to break the descending trendline, this will likely bring a strong round of buyers as it signals a potential change of trend from bear market to bull market.
Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.