BTC forming a very valid bear flag. We also see no volume off the bounce, which is a recipe for more downward price movements:
So, on my last post I stated it was a little early in the pattern to chart a bear flag with the lack of touch points, but after giving it a little time, we now have just that. You would expect at least some volume off that pretty big leg down, but nope. No demand down there which is expected because its hanging out in the middle of nowhere inside the middle of the descending triangle and not near any major support levels. It seems as if it wants to wait for the 50MA (purple line) to catch up and give it the kick downwards. We're also very close to the 38% retracement so maybe they can all meet at the same area to give it the rejection it needs to start going down another leg.
How low can this go?
Well, I will keep stating your first target is the bottom of the descending triangle at 6040 area. Gut feeling tells me this won't hold the next time we touch it. We can, however, I don't expect it just by looking at the outside picture. It wouldn't make sense. BTC is pretty irrational, but you have to stick with what you see on a more longer timescale
As you can see by the weekly, we have plenty of room to the downside if it wanted to take that course. You see 2 very well established diagonal trend lines. One of which intersects a big horizontal support at $4966. The second of which is the base of your uptrend. Even if we hit both of these areas, it wouldn't look that bad on a zoomed out picture because its still in an uptrend. I don't believe we will go to the lower trend line but we may later on in the future seeing as its a moving target to the upside. The upper trend line, however, I feel must be touched.
Obviously things can change and BTC can just bounce off the bottom of the descending triangle and just go sideways for another year and hit the first diagonal trend line in February. Anything is possible. That would be the most optimistic scenario seeing as we won't have a major sell off below the triangle. Unfortunately, Im leaning toward the first scenario where we could break down below the triangle and test support down there around $4900. If we get to those levels we will get a crystal clear picture if we've finally found a bottom.
Just remember, BTC was around $2900 a year and a half ago. Its still very expensive for the smart money. We'll take a look at this as one step at a time. For now, we got to see what happens when we get through the bear flag.
Hope this helps!
Good luck!