Bitcoin Consolidation Pattern $4000-$4500

Disjointed price action is a common characteristic among markets searching for a value area. Currently, Bitcoin (BTC) is such a market, with buyers and sellers attempting to establish a fair price. For the last four sessions, the range of $4500-$4000 has been heavily traded. The result has been a compression pattern on the daily chart for November BTC futures.

When there is a lack of moving averages, Fibonacci numbers, or other technicals near price, big-round-numbers gain importance. BTC has reinforced this point, with price rejecting $4000 and rotating back to $4250 and $4500.

Let’s take a look at the daily chart for November BTC futures and see if we can determine which direction this market is headed.

November Bitcoin (BTC) Futures

In an update from yesterday, I outlined the “L” pattern that developed for the USD/CHF. BTC is currently exhibiting similar characteristics. Is a directional move on the way?

Here are the levels to watch for BTC going into the weekend:

• Resistance(1): Psyche Level, $4500
• Resistance(2): 38% Retracement, $4981
• Support(1): Swing Low, $4015

Overview: To be honest, I expected $5000 to be more of a magnet for BTC. Price steamrolled through this level, posting a test of $4000 in short order. From a technical standpoint, the bearish trend is in full effect. Buyers have yet to step in and seriously challenge sellers.

However, $4000 has proven to be valid support on several occasions. While simply an arbitrary big-round-number, this market has to bottom somewhere. One thing is for sure ― the selling is consistent. If bargain hunters fail to step in at $4000-$3800, then a rapid drop to $3000-$2500 becomes probable.

If you are long this market from $5000ish, keep a close eye on $4000-$3800. In the event it gives way, it may be best to exit and look for a better entry in coming weeks.

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

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