A Geometry Lesson in Today’s Scrutiny of BTC USD


With Bitcoin currently ranging around $6,360, there’s quite a bit of analysis of how long a sideways trend will last without a major breakout in either direction.

This morning, NewsBTC is looking in detail at how Bitcoin trades above structural supports at $6,385 and $6,355 against the U.S. dollar.

With Bitcoin currently ranging around $6,360, there’s quite a bit of analysis of how long a sideways trend will last without a major breakout

In the case of a break below $6,385, argues Aayush Jindal, Bitcoin price could slide further toward $6,355, signaling more of a bearish trend.

Jindal also talks about movements over the last three trading sessions, and that’s where you get an interesting kind of geometric analysis, with a chart from Kraken showing what Jindal calls a “crucial contracting triangle.”

If you’re not familiar with this construct, Jindal is looking at a set of candlesticks over a number of trading days that, as the handy chart in today’s article shows, provides a set of narrowing ranges. When traced by vectors, these ranges form a kind of cone-shaped triangle, converging into that $6,400 range or thereabouts.

For more information, check out an article at Admiral Markets where Chris Svorcik talks about the construction and signaling of chart triangles.

Svorcik explains that it is the nature of these contracting triangles to have top and bottom forms that don’t break or, putting it another way, lower highs and higher lows represent a kind of convergence that, according to theory, will eventually end – how it will end depends on many factors, but Svorcik points out that in many cases, breakouts occur in the same direction as the previous momentum.

“This pattern, therefore, offers interesting trade possibilities and entry setups for traders,” Svorcik writes, “because the tops and bottoms represent natural and strong support and resistance (S&R) points.”

Svorcik further talks about reading the candlesticks, which provides a basis for traders to understand the work of a triangle in continuance.

“I myself use candlesticks to measure whether a breakout or bounce trade setup has been properly formed,” Svorcik writes, directing readers to a video on the site for more information.

Going back to today’s Bitcoin analysis, Jindal talks about “MACD moving into the bearish zone,” pointing to a momentum indicator called Moving Average Convergence Divergence” that combines with the triangle pattern to form another movement prediction resource.

All of this detailed analysis, at bottom, corresponds to a breathy feeling of excitement as traders look for a long-term sideways movement to go either higher or lower. As analysts have noted, the very stable, calm waters of Bitcoin prices over the last days, weeks and even months is not great for day traders, who make their bones on wild volatility.

It has people waiting for the other shoe to drop – look back to last year’s wild swings through November, December and January, and you’ll see how it’s all too eerily calm in the eye of the Bitcoin market, and that’s what these triangles and everything else are pointing to.