We will take a closer look at Bitcoin, where it is right now, and possible scenarios with this review. As always, I will be starting with the macro perspective (monthly, weekly charts), and then I will drill down to lower time frames.
So let’s start with a glance at the price action for the king of them all.
BTC has hit the ATH at the level of $58,500ish for Binance perpetual futures. This means that Bitcoin value has more than doubled, comparing the high from December’2018. Shortly after achieving the ATH, there was a selloff to $43,000. This is a -26,5% throwback. Since then, we are noticing a consolidation.
Does this make BTC bearish now? In my opinion, there is a chance that BTC will not make new all-time highs soon. I think a retrace is more probable now.
Price action in December 2018
The reasoning for this lies in the historical data. The weekly chart below presents the previous ATH from December 2018 and the price following that.
The green candles are marked with numbers. Candle (1) was the one that has noted the high just below $20k. A sell-off then followed it.
It is important that the green candle (2) did not break the green candle’s high (1). It has actually closed inside the candle range (1), and it was followed by another sell of.
The same happened with a green candle (3). It has closed inside the preceding green candle (2), and the consecutive red candles created lower low.
This is price slippage where the price bounces but is unable to create new higher highs.
Current price action
The current price action is presented on the weekly chart below.
If we leave the support levels, for now, the price action from this week looks quite similar to the 2018 example.
The candle (1) marked the new ATH and was followed by a 26% sell-off. This week’s candle (2) was a bounce off which was actually very weak, and the weekly close will be inside the previous green candle (1).
This might be a start of the price slippage, and we might notice weekly red candles, which will generate lower lows.
A view on a monthly chart
The monthly chart for Bitcoin.
The monthly chart adds more confidence in the scenario where BTC would retrace now. There are two important details:
The January candle has a very high volume, significantly higher than it was in the previous months. February’s volume was standard, but the price did not actually make an explosive rally.
Historically, increasing volumes on the green candles ended up as tops or the local tops at least. The example of a local top with a high volume on the green candle can be noticed in June 2019. It is visible on the same monthly chart presented earlier.
Long upper wicks
Another important factor is that January and February candles have long upper wicks. At current levels, which are historical highs, this might imply that traders are actually selling into these candles, i.e., distributing their longs rather than buying Bitcoin.
Coupling this with a high volume in January, I take the current price action as a beginning of a price slippage to lower levels.
During a run like we had for the past couple of months, I am looking for support levels in a sudden drop.
The daily chart below presents levels where the price should find support during the pullback.
These areas are ICT’s bullish Order Blocks, which BTC has formed daily during the bull run. We can see that the 1st support level already did the job. The candle pointed with the arrow dipped into this area and immediately bounced off.
In case of a further drop, most probably, this level will once again support the price.
In case of a further drop, the price should find support at the area marked as the 2nd support level.