BITCOIN In DANGER if this level breaks. Can this save the day?

BITCOIN In DANGER if this level breaks. Can this save the day?

Bitcoin / U.S. dollar BITSTAMP:BTCUSD


Bitcoin ( BTCUSD ) has been trading within a Falling Wedge pattern ever since the August 15 top. This analysis is on the 1D time-frame but we do incorporate the 4H MA50 (green trend-line) and the 4H MA200 (grey trend-line) to help us understand critical Resistance and break-out level.

** The Falling Wedge and the importance of the 4H MA50 **
What stands out here is that while Bitcoin is on Lower Lows ( Falling Wedge ), the 1D RSI has been on Higher Lows, showcasing a Bullish Divergence . However that is not enough on its own to start a rebound to the top of the Wedge . What is needed is a candle closing above the 4H MA50. We haven’t had one since September 12, which was the previous High of the Wedge . Even before that, since August 15, we see that the candle never closed above the 4H MA50 and only when it did once (Sep 09), did the price rebound. As a result we should consider a closing above the 4H MA50 as a bullish break-out signal targeting the 1D MA50 (blue trend-line) and the top (Lower Highs trend-line) of the Falling Wedge , on the short-term term only. We can derive further confirmation if the 1D MACD makes a Bullish Cross again (last did on Sep 09, exactly when the rebound took place).

** The danger of breaking a Triple Support cluster **
The danger for BTC lies on the potential 1W MA300 (red trend-line) test. As long as the 4H MA50 keeps rejecting a break-out, the price should continue trading lower on the Lower Lows trend-line. Eventually that can test the 1W MA300 on the first week of October. Interestingly enough, this is where the current Support level is (17600), formed by the June 18 Low. If this Triple Support level breaks and the week closes below it, an enormous sell-off can taken place. During this 2021/22 Bear Cycle, it has been common for Bitcoin to fall within -45.50% and 55.50%, as the following chart suggests:

Assuming that the August 15 High was the start of such a sell-off, then a -45.50% move can be completed around 14000 while a -55.50% drop can be completed at around 11500.

What probabilities would you give to see those targets? Feel free to share your work and let me know in the comments section below!

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