After the Bitfinex hack crash and the recovery that followed, bitcoin has been stuck in a large triangle pattern. The market is in a 'wait and see' mode here. The likely culprit for this is again Bitfinex as the former number one BTCUSD exchange tethers on the edge of bankruptcy.
But this is a technical analysis update so let's hit the charts! The chart below uses BTC-E price feed, exchange that took up the number one mantle from Bitfinex.
On our first picture above we see that bitcoin has been stuck in a large triangle pattern. The current boundaries of this price formation are at $566 (bottom) and $577 (top). Because of the nature of this price formation, we could get a breakout with the simple passage of time, not triggered by any price movement. Because of this (and to shields us from false breakouts) a little bit wider range seems more appropriate, with a top at $584 and a bottom at $560.
Bearish Breakout Targets Long-Term Trendline
A move to the downside has more potential due to the fact that we've been in a downward trend on the daily charts since the peak near $800 two months ago. But if we zoom out a bit we can see that bitcoin has yet to break the long-term trendline stretching all the way back to August of last year. This year-long trendline lended some support to prices during the chaos following the Bitfinex hack and will likely continue to do so. Conservative shorts should keep this trendline in mind as a potential target. It's around $513 right now but it will slowly move up with time.
Bulls Should Stay Nimble
If we get a bullish breakout above $580, things are more complicated. As I wrote above the daily trend has been down for two months and it would be unreasonable to expect this to change. Possible targets are the $600 and $650 round levels. Bulls are fighting against the momentum and should stay nimble in this environment.
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