Bitcoin - Retest Incoming?
What happens next?
Welcome to the Rekt Capital Newsletter, a resource for investors who want to better navigate the crypto markets with the help of cutting-edge crypto research and unbiased market analysis.
The Weekly Downtrending Channel
In recent weeks, we've been talking about how Bitcoin has broken out from its Downtrending Channel and how price would likely post-breakout retest it.
Here is the analysis from late October:
And here is last week's analysis:
The retest was shown to have been successful and from that retest price transitioned into a Bull Flag (blue).
Since then, BTC performed a Bull Flag fake-breakout to $70000+, producing a long upside wick beyond the Bull Flag top resistance:
Ultimately, the most recent Weekly Close below the Bull Flag top means that price will continue to meander within the Bull Flag until a meaningful trend shift occurs either by Weekly Closing above the Bull Flag Top or doing the same below the Bull Flag Bottom.
For the moment, BTC is teasing to breakdown from the Bull Flag but because it is show early in the week, price could maintain the Bull Flag but produce a downside wick instead.
Generally however, BTC is in a position where it could very easily produce a long downside wick into the previous Channel Top resistance just to continue reaffirming it as support (green).
Continued stability above the Channel Top would mean that price is ready to emerge into a new sustainable trend to the upside.
The Weekly ReAccumulation Range
Overall, Bitcoin's revisit of the Range High resistance of the ReAccumulation Range is supposed to showcase how much that resistance has weakened as a point of rejection.
And so this current pullback could be Bitcoin's way of demonstrating how weakened this Range High resistance really has become.
Currently, BTC is down almost -5.5% since the Range High rejection:
For example, if price continues to hold above the Channel Top, at worst then BTC could face an -8% pullback:
That would see price drop into ~$66200, provided that such a pullback occurs this week; the black diagonal is a dynamic resistance and declines over time, representing lower and lower prices over time.
But it's clear that this black diagonal used to be a resistance and for as long as it continues to hold as support, price should be able to revisit the Range High in the future once again.
If indeed BTC produces a limited retrace following its rejection from the Range High resistance, then we will have that confirmation that it is sufficiently weakened and ready to be breached in the future.