By Jeff Clark – the editor of the Delta Report Newsletter
Last week we asked, “Is Bitcoin Gearing Up for a Year-End Rally?”
We got our answer on Wednesday. The market said, “NO!”
Bitcoin broke down from its consolidating triangle pattern. And all that energy I thought was being stored up for a rally got spent pushing bitcoin in the opposite direction. Here’s the updated chart…
Bitcoin broke down from its consolidating triangle pattern. It dropped 15% in one day. And it’s now testing support near $5,250 per coin.
This chart has suffered significant damage. Momentum indicators, like the Relative Strength Index (RSI) and the Commodity Channel Index (CCI) are more oversold now than they have been all year. This condition might help bitcoin bounce back a bit from here in the short term.
Let’s hope that happens. Because if the $5,250 level doesn’t hold, then the next support line is down around $4,300.
So… does this wipe out the chance of a year-end rally for the leader of the cryptocurrencies?
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Yes, it probably does.
Unless bitcoin can recover immediately and get back above $6,000 – like today – then there’s not much hope for a year-end rally.
I have seen charts like this break down, flush out the last of the selling pressure, and then immediately reverse. So, let’s not rule out that possibility. But, if a reversal is going to happen then it needs to happen today. Bitcoin needs to rally back inside its triangle pattern – and maybe even press above the triangle in order to repair the damage to this chart.
That’s probably wishful thinking. Given the severity of Wednesday’s decline, it looks like the breakdown is for real.
Bitcoin now needs to hold onto support at $5,250 and spend some time chopping back and forth in order to build up energy for a new rally phase.
That’s probably going to take some time.