If Bitcoin Fails a Reversal Above $7,000, Look Out Below (Claims Analyst)

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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.

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.

Trading Pattern

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.

Summary

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.

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Valdrin is a cryptocurrency enthusiast and financial trader. After obtaining a masters degree in Financial Markets at the Barcelona Graduate School of Economics he began working at the Ministry of Economic Development in his native country of Kosovo. In 2019, he decided to focus full-time on cryptocurrencies and trading.

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