On Sept 24 the Bitcoin price suffered a flash crash of roughly 18% in a day. Since then, it has been trading inside a range of $7,800-$8,800, creating a strong support area.
If the price of Bitcoin undergoes a further breakdown below $7,800, it is likely to continue all the way down to $5,400. However, there are minor support levels on the way to $7,000. So, unless the decrease below $7,800 has very significant volume, the $7,000 level is likely to initiate a reversal.
Cryptocurrency analyst @overheadcoffee outlined the most important support areas that are likely to provide some relief.
Don't fight it bullas https://t.co/hANCQCy0ss
— ☕CRYPTO. COFFEE.☕ (@overheardcoffee) October 18, 2019
We can see that besides the support area at $7,200, the next is way below around $5,000-$5,400.
Bitcoin Volume Profile
Looking at the volume profile, we can see that the majority of the trading has been inside the $7,800-$8,200 area.
Additionally, we can see a complete lack of buying power between $5,500-$7,500.
The next level with significant buying power is found at $5,000-$5,500.
Therefore, this indicator completely agrees with the hypothesis laid out in the tweet.
However, we can also see that the price is trading inside a descending wedge.
The support line is descending, so it is more likely to provide support to the price going down to the low $7,000s.
Additionally, while the main support area is found near $7,800, there is minor support between $7,000-$7,200.
This was especially visible in the long lower wick on May 17.
Finally, there is some bullish divergence developing in the RSI. This reduces the chances of a possible breakdown.
To the contrary, combined with the creation of a bullish pattern, it makes an eventual breakout somewhat likely.
BeInCrypto previously discussed this hypothesis in full here.
The price is trading inside a major support area at $,7800-$8,200. However, it is also trading inside a descending wedge.
Therefore, we believe the wedge is a better indicator of the final support before the price heads to $5,400.
So, if the price breaks down from the wedge it is likely to reach $5,400. If not, the $7,000 support level is expected to initiate a reversal.
Do you think BTC will initiate a reversal or will it head towards $5,400? Let us know 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.
Images courtesy of Twitter, TradingView.