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Bitcoin Friday: Technical Analysis of Bitcoin

Today, we will look again at the technical analysis of Bitcoin, which is still more or less in the same range. Moreover, it seems that we are close to the theoretical Wyckoff method.

Wyckoff method is a theoretical model with which description can be found in the picture below.

Wyckoff method scheme Figure 1: The Wyckoff method scheme Wyckoff method on current BTC chart Figure 2: The Wyckoff method on current Bitcoin chart

The similarity is really striking. These sideways movements are often accompanied by false signals. The last was, for example, just a breakthrough in the new LOW, which could tell us that the current support will not last and the price will go even lower. However, that did not happen. This sideways moving structure tends to discourage traders, especially beginner ones. It is still the same repetitive cycle. The period of growth which attracts many newcomer traders is always followed by a similar scenario. Often ending up with many of them selling their BTC and leaving the market for good.

From the market psychology point of view, fundamentals are also largely involved. If you notice, there is always a negative fundamental accompanying the price whenever it comes near to the support. such as with miners in China or the decline of HASHrate. On the other hand, whenever we approach resistance, positive news comes to the market such as those from El Salvador and the like.

4H chart

At this point, I expect a smaller decline on the 4H chart, but growth on BTC could return again over the weekend. Overall, we have broken the downward trend with a decent volume, and growth should therefore continue. I consider this broken trend we are witnessing as the strongest support which the BTC could test at this moment. The same goes for MA21.

default Figure 3: BTC on a 4H chart

Determining the direction and some longer-term trends of Bitcoin is currently very difficult, so I would recommend trading mainly on the 4H chart. Because Bitcoin is in a sideways motion and does not have a clear direction. The only thing we can do is open long positions in the growth to resistance and, conversely, go short on the decline to support. It is challenging and one day it may not work out for us. This will be exactly when Bitcoin gets out of range and definitely decides which side to go.

Jakub is a crypto trader and founder of Trader 2.0 project, which helps hundreds of traders from central Europe to understand cryptocurrency trading and its challenges. Jakub not o...

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