Bitcoin May Still Be in a Downward Channel, Despite Yesterday’s Rally

However, a more regular price structure becomes visible once we look at longer-term time-frames. When looking at price movement over a span of one or more years, we can see that the price often follows clear and defined trading structures. Cryptocurrency commentator and investor @davthewave pointed out that despite all of the recent volatility in the short-term, we can be sure that Bitcoin is trading inside a longer-term descending channel.

BTC may keep you guessing in the short term, but one thing is for sure – still in the downward channel. pic.twitter.com/jzKGlluxpc

— dave the wave (@davthewave) October 10, 2019

Even though the channel is a neutral pattern, it is downward facing. Therefore, as long as the price stays within its confines, it is likely to continue decreasing. Let’s take a closer look at the price movement inside this time-frame.

Channel or Wedge?

Analyzing this movement we can see that even though it seems quite likely, there is no assurance that the price is in a descending channel. It is possible that the price is trading inside a descending wedge instead. While both these patterns are downward-facing, the descending wedge is a more bullish pattern, making a price breakout more likely. Actually, the resistance line of the wedge (dashed) has been validated more times than that of the descending channel. Furthermore, the current resistance line of the wedge coincides perfectly with the resistance area at $9500. This area acted as support three times, on July 17, 28, and Aug 30, before the price finally broke down on the Sept 24 flash crash. If the price were to increase all the way up to this resistance it would be a very customary retest of a previous support area. The presence of the descending wedge does not invalidate the channel, rather, it only reiterates the strong resistance at $9500. While we cannot decide on the current pattern, we can be sure that as long as Bitcoin stays below $10,500 (resistance line of the channel), we cannot consider its movement bullish. Do you think the Bitcoin price is trading inside a descending channel or wedge? Drop your thoughts in the comments below. Disclaimer: This article is not trading advice and should not be construed as such. Always consult a trained financial professional before investing in cryptocurrencies, as the market is particularly volatile.