In the last 3 days, we have seen at least 2 significant flash crashes (sharp downwards movements), yet, in both cases, the price quickly rose up again. In the second case it all even happened within the same 4-hour candle. What does this mean?
The weekly chart shows one terribly looking candle. The last red candle, which had a long wick and shows TOP for now might look a bit worrying. I believe that the strongest support we have is somewhere between 52 900 – 55 500 USD. However, this does not mean that since there is one ugly candle, we have to break this support. On contrary, we do not even have to come to those levels. This week, the weekly candle will also be closed with a monthly candle, which means there might be more volatility ahead of us in the coming few days. If we hold the above-mentioned support, we do not have to worry at all.
Looking at daily chart, we can see that both the support and trendline are equally important, but as of now, we are a bit too far from both of these levels. We should not be even talking about bear market, until we break both of these supports. Yes, the lower timeframes might look a bit more edgy due to several panic sells and flash crashes, but if you are not sure what trend you are in, always zoom out. These crashes have not invalidated any important levels and therefore there is no reason to be bearish.
The 4-hour chart shows nice ABC correction in a wedge. Bitcoin has 3 important resistances above the price right now, which are blocking the biggest cryptocurrency from the upward movement. These are 1. MA 22 – which we have just broken, 2. MA 77 – which we are testing at the time of writing this article and 3. Trendline – which again, is just being tested.
Until we break these three resistances, we cannot be looking at any type of massive uptrend. This can take even few more days, however, there is no question of whether we will break them (but rather when). Yesterday the bears tried once again to push Bitcoin down, but they were unsuccessful and thus I believe that the time for new ATH is coming.