In today’s market trading, Bitcoin is really pushing back toward $4,000 after wallowing in the depths around $3,500.
It’s been a long, slow slide, as BTC slumped to one month, and three month, and six month lows, and investors got very nervous about Bitcoin value.
You also have to consider that with a high of $20,000 last year, anybody who bought (unhedged) during that time frame has already lost their shirts.
But the slide down from $6,500 after Thanksgiving had a lot of investors worried.
Now there’s brighter news on the horizon – some weren’t expecting Bitcoin to so quickly break back above $3,700.
However, Yuval Gov at Cryptopotato predicted this swing somewhat in a very recent piece entitled “Are Bulls Back or is it a Dead-Cat Bounce?”
“Looking at the daily chart: yesterday’s Japanese candle closed very strong and bullish, marking a breakout from the descending trend-line,” Gov wrote, considering the move up above $3,700. “This is definitely a bullish sign that might grant the market enough fuel to continue to the $3,900 – $4,000 resistance area.”
And continue it did, as Bitcoin, as of press time, only needs pocket change to break $3,900.
With that in mind, let’s go back and look at another piece that Gov wrote in November that illustrates some of the value behind the technicals.
A piece called “Crypto Technical Analysis: Head and Shoulders Pattern, Triangles and Wedges” is a really good survey of the three types of triangles you can see in stock analysis – ascending, descending and symmetrical triangles.
Gov points out the specific trend settings for each triangle type, for instance, with ascending triangles, where wild swings from the support price show a willingness to go up, and signaling on descending triangles, where upward resistance shows that an equity may be poised to sink.
We know that volatile stock prices are “elastic” – that they move according to pretty dependable trends, even though there are so many question marks and unknown factors mixed in. Gov’s piece makes a lot of sense in explaining triangles to investors who may not be familiar with this specific type of analysis.
As for the symmetrical triangle, which Gov describes so well, we saw one of these in Bitcoin’s stabilization last month – trend lines all funneled down to the symmetrical point where Bitcoin hovered around $6,500 for quite a long time before the current rout brought it down almost 50%.
The moral of the story is what you take from it. Triangles are only one factor, but they bear looking into. Long-term Bitcoin investors can take some comfort from the upswing. But always remember the cryptocurrency segment is a volatile field, and research is key.