What a brutal sell-off that was?
Bitcoin Dropped around 15% in last three days. World’s largest cryptocurrency dropped to 8550$, filled CME GAP, and bounced from 8550$ and currently trading above 8800$. Despite of this brutal sell off, we still think Bitcoin has chances to recover from here and make a new high in coming days.
Let’s discuss technicals to understand why do we think bitcoin can make a comeback.
Bitcoin Technical Analysis
Cup and Handle formation
We have spotted a cup and handle formation on Bitcoin Daily chart, which is a bullish continuation pattern.
What is cup and handle formation
The Cup and Handle pattern is characterized by two distinct features. First, there is a “U” shaped chart pattern which is considered “The Cup”. The Cup is followed by a slight consolidation or downtrend which forms “The Handle.” The pattern is considered to be a bullish continuation pattern.
Key aspects of the Cup and Handle Pattern
- Trend: Because the Cup and Handle is ultimately a continuation pattern, it should be preceded by an uptrend. Typically this trend would be around a few months old.
- Cup: The cup should be a “U” shape with valid support levels at the bottom.
- Cup Depth: Remember, the cup shape is a retracement of a previous advance.
- Handle: After the formation of the right side of the cup, the handle is formed.
- Volume: Volume should follow along rather closely with the shape of the cup as it is being formed.
- Duration: The duration of the pattern can vary greatly.
- In the above mentioned chart, we can see A Cup and handle formation has been completed.
- Bitcoin retested the major uptrend channel at 8550$, and currently price is holding above this major support.
- To validate the cup and handle formation, Bitcoin needs to hold 8550$ as a daily support.
- Bitcoin needs to record ascending growth in buying volume to validate this formation
In our opinion, Bitcoin needs to save monthly candle first – which looks terrible right now. We wan to see the current monthly close above 9500$, and 8550$ should hold as a daily support. If both these conditions can match than we can see a successful cup and handle formation breakout which can lead the price to 12000$ in coming days.
Subscribe To Our Newsletter
Join our mailing list to receive Cryptocurrency investing and trading recommendations to your mailbox.
You have Successfully Subscribed!
Subscribe to get notified on latest posts.