Bitcoin is back above $9,700 and we are now likely to see it rally past $10,000. The price ended up testing the $9,830 level before it retraced from there. We are likely to see further upside follow from here in the near future. The daily chart for BTC/USD shows a symmetrical triangle that the price is very close to breaking out of. Either we might see a break to the upside or a break to the downside but we have to see it do either of the two most likely before the end of the month. In addition to that, we have a descending triangle on the daily chart which is also very close to be broken to the upside as the price has formed a bull flag as we can see on the 1H chart which has a very high probability of being broken to the upside.
Historically, descending triangles are known for breaking to the downside but just recently, we saw it break to the upside on BTC/USD when the price attempted to rally towards the top of the symmetrical triangle leading investors into thinking that a new yearly high might be possible. This is why it is very important to keep context into account. It’s not just about trends or patterns playing out a certain way, it’s the reason why they play out as they do. If we look at the price action this time, the market makers have a two pronged objective here. They want to scare the bears and liquidate them while at the same time leading the bulls into thinking that a new yearly high is still possible. In my opinion, if we were to see a new yearly high, we would have seen that when the price rallied towards the top of the symmetrical triangle the last time.
There are some strong similarities between the price action now and that of 2014. We have pointed to them many a time in our previous analyses but things are getting even clearer now. Previously, we were only talking about how the 2014 parabolic advance was similar to what we have seen this time in 2019. Now, even the symmetrical triangles are looking incredibly similar and the price is invalidating descending triangles same as last time forcing the bears to lose hope and the bulls to get more confident.
The Fear and Greed Index is currently at 28 which means that there is still plenty of fear in the market. However, once we see the bull flag come to fruition and the descending triangle get invalidated, we will see a rise in greed. Before the actual downtrend begins, we will see people talking about a new yearly high again. The EUR/USD forex pair has begun its downtrend as it has broken below the pennant and descending triangle both. Similarly, the S&P 500 (SPX) is likely to see further upside as it closed above the 50 day EMA but is the small 3% or so gain to the upside worth risking it for a potential 20% or more downside? In my opinion it is not and the same applies to Bitcoin (BTC). The price might end up rallying as high as $11,000 but if you look at the big picture, it is not worth chasing the price at this point.