Bitcoin has been coiling sideways since its early September decline. The relatively quiet five-week consolidation will likely be followed by a big move that could go either way.
As depicted on my chart, I expect the big move to be to the downside but only to complete a larger a-b-c pullback pattern from the August high. That will then set us up for the next big rally into next year.
The sharp decline in early September, followed by the little sideways triangle, suggests a breakdown from the coiling pattern is the higher-probability move.
It takes a rally above $11,100 to suggest something more bullish is happening instead, even if it’s to be a short-term higher bounce within the consolidation since August.
Assuming we’ll see a continuation of the pullback from August (an expectation I have for the stock market as well), I will be watching the following levels for possible support:
- 200-day moving average (brown line) near $9,500
- Price-level support near $9,150
- Two equal moves down from August (not shown on the chart) near $8,500
- Price-level support near $7,500
- Price-level support and uptrend line from 2018, roughly $6,200 to $6,500
Strong pullback response
Each of the above support levels would be a good buying opportunity. If you’re looking to start an investment or add to your existing investment, buy a little at each level, if reached, and don’t worry about a short-term paper loss if price continues to drop. The rally that should follow this pullback will likely be very strong.
By the same “token,” don’t invest more than you’re willing to lose. This will prevent panic in a selloff and allow you to sleep comfortably at night.
This is a long-term investment (at least 1-2 years), and you need to be able to tolerate the up and down volatility.
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