Since mid January this year BTC has been trading within a channel. Teetering back and forward between the $5,800 and $11,750 areas. For those holding longs this is not an ideal situation, but there is one positive we can take from the uncertain world of Bitcoin. What's that? Chart analysis.
If we take a look at the BTCUSD daily chart above we note resistance formed where price several times gravitated to the $11,750 area, attempted to breakup above however failed and bounced to head down to the $5,800 area to form channel support.
NOTE: Several times I mention area. This is because even though we may be able to draw perfect trend lines or channels, price may not always respect the exact line but the zone around the price. TIP: This is very important to note when placing stops (for those who are relatively new to trading).
On the 19th of February BTC broke above the descending trend line (1) to be drawn like a magnet to the resistance zone (2) to again pullback and return to the scene of the crime where price had originally broke previous resistance now support (3). Just from points (1) to (3) you can see how price does test certain price levels. These price levels are watched by many traders who open positions according to their analysis of these particular zones.
Price once again tested resistance at $11,750 (4) only to have the bears prove their point. Price unable to break above the channel hence price moving to test significant prices level (5) & (6).
As you can see when trading it is very important to take note of significant price areas and how the market reacts around them. By doing this it can help improve your entries, exits and stops.
Where do I see Bitcoin heading?
Price really hasn't moved a lot last week compared to what BTC has been previously capable of. Just from analysis of the chart ignoring possible crypto news we could continue to see sideways trading for a little while yet. For there to be any possibility of recovery for BTC we would need to see a break and close above the channel resistance around $11,750.
The world is watching.....