Bitcoin Technical Analysis – An Extensive Deep Dive, What’s Next?

A Word From Hindsight

Now, before I get into the state of the current market, I want to revisit my bear market prediction from approximately five months ago. Bitcoin was trading above $30K, as seen in the chart below. Back then I mapped out a massive falling wedge with a bottom at approximately $18K, which we have since seen. The falling wedge I mapped out had an “exhaustive target” between $13K and $10K, more on that later. I want to remind you that many reading this post disagreed with me at the time. The majority were calling for $25K, perhaps $22K in a worst-case scenario. Another “popular viewpoint” at the time was that Bitcoin would never break $20K again.

In sharing this recap, I want to bring across something very important. When you come across an analysis that you might not particularly agree with, do it respectably. Hindsight has a way of sifting the wheat from the chaff. There is no need to go to the extremes that I saw many reach, in order to “protect their predictions”. Psychologically speaking, such a response is actually evidence of inward doubt, accompanied by the inability to accept it, ultimately manifesting in such behavior. You will never accurately interpret the market with unbridled emotions. It’s difficult as it is, even when they are in check.

The Wedge & The $18K Level

So far, the $18K level has held out. I include the drop to $17.600, as it was a wick that ultimately saw the $18K level being respected. However, we have just seen it being retested for a third time, which I called on the 6th of October, once again to disbelief.

There are many who are stating that the support at $19K to $20K is rock solid. However, they don’t realize that this is by design. It’s a setup to create an enormous amount of liquidity. This will eventually be plundered by the whales and will serve their agenda of “real” accumulation.

The $18K level did hold remarkably well, which was followed by a solid bounce. Unfortunately, it was a bounce inspired by traditional markets. Once again, the correlation dynamic, which I unpacked in a recent article, “Cryptocurrency – Delayed Realization & The Stage Of Confusion”. The problem we are now facing can be seen in the chart below. Not only is Bitcoin retesting $18K on an ongoing basis, but we have another big move just moments away. This was predicted and explained in more detail in another recent article.

We can clearly see that Bitcoin is about to make a massive move. Unfortunately, for the bulls, this is a continuation pattern. Furthermore, the macro picture is also bearish. Volume to the upside has also been very weak. This was one of the indicators pointing to the recent dump. The screenshot below is taken from the article, “Bitcoin – Analysis & The State Of The Market”.

This was a clear indication that the support was about to be conquered. All that was required was a catalyst, which was the CPI update. However, back to the descending triangle. Confluence is currently siding with a bearish break below $18K. That being said, never underestimate “Dumb Money”. However, a break to the upside would likely be a fake-out. A potential “final flush” makes a lot of sense from so many angles. This is already quite a lengthy post, so perhaps another article, provided price action allows a long enough window.

Pictured below is the large falling wedge I mapped out back in May of this year. You can see that if the entire scope of this wedge were to be exhausted it would be at approximately the $11K to $12K level. I put my worst-case target at $12K to $13K for two very important reasons.

Firstly, the entire “scope” of a falling wedge is seldom filled. Secondly, the support at $13K goes back all the way to 2019, and even though I don’t discount a drop to $10K, I believe it would be a wick, similar to the $18K support that wicked to $17.600. It is important to note that this wedge could break out higher. So why have I opted for this level?

How Price Travels

Studying price action will reveal one very important aspect that is foundational in the world of trading. Price moves within certain parameters, being support and resistance. The price action is ultimately drawn to these levels almost magnetically. There is nothing going on at say $15K or 16K. It doesn’t mean that Bitcoin cannot bounce from these levels. However, it’s unlikely because such a move would require some sort of stimulus in the form of a bullish event or announcement. I have mentioned to my readers that we would have to see at least $15K, in my opinion. That would be a good outcome.

This is rather unlikely, yet not impossible. My target remains at approximately $12K to $13K. You will notice that much of my thesis has nothing to do with previous cycles. Many have noticed that there are similarities, and therefore, I am basing my predictions on past cycles. This is pure presumption and couldn’t be further from the truth.

At no point do I refer to percentage drops of previous bear markets, or any other comparison. In fact, I obliterated previous performances by suggesting a drop below the previous all-time high. Those who suggested that I was simply mirroring past cycles should revisit their publications. Did you suggest that Bitcoin would not drop below $20K? A prediction based on past performance…

Long-Term Patterns

I have made use of long-term patterns that commence in 2021 and extend into the future. I have also made use of analysis on shorter time frames, recognizing volume, as well as support and resistance levels, along with other indicators. I place no trust in models, as prices can deviate and subsequently experience a reversion to the mean at a later stage. Models can also fail.

Final Thoughts

My best-case bottom prediction has actually held for a number of months now. However, as mentioned numerous times, I think the worst-case is about to trigger, especially looking at the current descending triangle formation. That being said, I would gladly see a fat bounce at $18K, and begin moving up. Unfortunately, that outcome is not very likely. Anyway, I have attempted to unpack the most important aspects of my predictions initially published in May.

Hope to see you in the next one. All the best!