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No, Bitcoin Price Is Not in a 2018-Like ‘Descending Triangle’ of Doom

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Twitter is bearish, abuzz with chatter of a descending triangle that is forming on the Bitcoin (BTC) chart and with comparisons to the descending triangle that broke down in 2018 at $6,000. 

Twitter is often wrong. Let’s first define the descending triangle.

A descending triangle is among the most famous classical “bearish” chart patterns used in technical analysis. It is created when price forms a descending trend line with lower highs, while a second horizontal trend line with equal lows evolves. 

Strict chartists use candle wicks and require the touches to be alternating, with at least 2 touches to one line and 3 touches to the other, as seen below in a downtrend.

Drawing

This pattern can occur in both uptrends and downtrends, often has receding volume before breakout (78% of the time), and is confirmed when price closes above or below one of the trend lines. Those are the boring basics.

An interesting fact that few people know — while this is viewed as an extremely bearish pattern, the statistics do not agree. 

According to Bulkowski (the undisputed authority on chart patterns), descending triangles break up 53% of the time

Further, when the triangle occurs in an uptrend, it is likely to break up 63% of the time. Even if price is forming a descending triangle on the current Bitcoin price chart, the odds that it breaks down are only 37%.

Does that sound bearish?

Is there a descending triangle on the current Bitcoin chart?

In our opinion, no. The idea is there, but the specific criteria are not met. The two touches on the horizontal support (the second wick does not even technically touch) do not have a touch up to the descending resistance between them.

BTC/USD chart

BTC/USD chart. Source: Tradingview.com

We have seen many traders draw the bottom line as seen below, in an effort to make the pattern appear more valid. They often explain this by saying that the bottom is generally an “area and not a line.” 

For strict chartists, this is unacceptable. Further, even if the horizontal line is forced, there is no third touch on the descending resistance to confirm the pattern.

BTC/USD chart

BTC/USD chart. Source: Tradingview.com

The difference in lows (using the wicks) is over 10% of the entire structure’s height, which lends credence to the argument that a descending triangle does not exist. Usually, traders look for it to be no more than 6%-8%.

What is the correct pattern?

There is a confirmed descending channel (often called a “bull flag”) with three touches on the descending resistance, and two touches on the descending support line. This pattern existed before the descending triangle was even a thought — there is no reason to attempt to draw a new pattern before the previous one is invalidated.

BTC/USD chart

BTC/USD chart. Source: Tradingview.com

What about the infamous descending triangle at 6K?

Bitcoin price famously formed a massive descending triangle with support around $6,000, which broke down in spectacular fashion en route to $3,200. 

Unfortunately, traders are comparing the two patterns and suggesting that because the previous resulted in further bearish momentum, this one should result in price heading down as well. Is this the correct way to view it even if the current pattern is seen as a descending triangle? 

In our opinion, no! The 2018 triangle did fulfill the technical criteria of alternating touches. However, the triangle did not start at the top of the all-time high where the downtrend began; it started at the drop to $5,873 in February. 

In other words, there was already a clear and significant downtrend when the pattern began. The descending triangle that printed at that time was a continuation pattern. And in that vein, if the current pattern is viewed as a descending triangle then traders should expect the same result — a continuation of the trend, which means that they should be expecting the price to rise, rather than drop, out of the pattern.

Further, traders would expect the bottom line of the triangle to behave as significant resistance on the first retest. This was the reason that crypto Twitter insisted that Bitcoin would be strongly rejected at a retest of $6,000 from the bottom. We were screaming the opposite and publicly opening additional long positions. 

What happened? As you can see in the pink circle, price passed through $6,000 like a hot knife through butter — there was no supply to be found, which is what you would expect after the breakdown of a descending triangle. 

You can argue that BTC price swung around the triangle apex thereby avoiding supply, but at that point, you’re having to stretch for validation. There is another explanation for the consolidation, break and subsequent bull rush back up through what was believed to be significant resistance, but we will save that for next time.

BTC/USD chart

BTC/USD chart. Source: Tradingview.com 

Bitcoin price did ultimately continue down, which descending triangle maximalists used as clear evidence that they were correct. As mentioned before, the price was already in a clear downtrend, which is likely the reason that price dropped — simple trend continuation after consolidation. 

Price reacting in a manner you anticipate does not necessarily validate a chart pattern.

A pattern is not a pattern until it is confirmed

A descending triangle is nothing more than a consolidation pattern, and most often consolidation patterns result in a continuation of the trend. But never forget, a pattern is not a pattern until it is confirmed as one. 

This doesn’t happen until the requisite alternating touches of support and resistance print and volume plays out as required. Traders can do themselves a favor by trying to understand why a pattern exists (the underlying psychology that leads to the pattern formation), rather than just taking what appears to be a pattern at face value and slapping that designation on it without confirmation — and then trading it. 

In doing so, they are more likely to profit from that pattern. Contrary to popular belief, technical analysis is more than just the lines on the chart — it’s an understanding of the underlying causes that have formed those lines.

Twitter is bearish, abuzz with chatter of a descending triangle that is forming on the Bitcoin (BTC) chart and with comparisons to the descending triangle that broke down in 2018 at $6,000. 

Twitter is often wrong. Let’s first define the descending triangle.

A descending triangle is among the most famous classical “bearish” chart patterns used in technical analysis. It is created when price forms a descending trend line with lower highs, while a second horizontal trend line with equal lows evolves. 

Strict chartists use candle wicks and require the touches to be alternating, with at least 2 touches to one line and 3 touches to the other, as seen below in a downtrend.

Drawing

This pattern can occur in both uptrends and downtrends, often has receding volume before breakout (78% of the time), and is confirmed when price closes above or below one of the trend lines. Those are the boring basics.

An interesting fact that few people know — while this is viewed as an extremely bearish pattern, the statistics do not agree. 

According to Bulkowski (the undisputed authority on chart patterns), descending triangles break up 53% of the time

Further, when the triangle occurs in an uptrend, it is likely to break up 63% of the time. Even if price is forming a descending triangle on the current Bitcoin price chart, the odds that it breaks down are only 37%.

Does that sound bearish?

Is there a descending triangle on the current Bitcoin chart?

In our opinion, no. The idea is there, but the specific criteria are not met. The two touches on the horizontal support (the second wick does not even technically touch) do not have a touch up to the descending resistance between them.

BTC/USD chart

BTC/USD chart. Source: Tradingview.com

We have seen many traders draw the bottom line as seen below, in an effort to make the pattern appear more valid. They often explain this by saying that the bottom is generally an “area and not a line.” 

For strict chartists, this is unacceptable. Further, even if the horizontal line is forced, there is no third touch on the descending resistance to confirm the pattern.

BTC/USD chart

BTC/USD chart. Source: Tradingview.com

The difference in lows (using the wicks) is over 10% of the entire structure’s height, which lends credence to the argument that a descending triangle does not exist. Usually, traders look for it to be no more than 6%-8%.

What is the correct pattern?

There is a confirmed descending channel (often called a “bull flag”) with three touches on the descending resistance, and two touches on the descending support line. This pattern existed before the descending triangle was even a thought — there is no reason to attempt to draw a new pattern before the previous one is invalidated.

BTC/USD chart

BTC/USD chart. Source: Tradingview.com

What about the infamous descending triangle at 6K?

Bitcoin price famously formed a massive descending triangle with support around $6,000, which broke down in spectacular fashion en route to $3,200. 

Unfortunately, traders are comparing the two patterns and suggesting that because the previous resulted in further bearish momentum, this one should result in price heading down as well. Is this the correct way to view it even if the current pattern is seen as a descending triangle? 

In our opinion, no! The 2018 triangle did fulfill the technical criteria of alternating touches. However, the triangle did not start at the top of the all-time high where the downtrend began; it started at the drop to $5,873 in February. 

In other words, there was already a clear and significant downtrend when the pattern began. The descending triangle that printed at that time was a continuation pattern. And in that vein, if the current pattern is viewed as a descending triangle then traders should expect the same result — a continuation of the trend, which means that they should be expecting the price to rise, rather than drop, out of the pattern.

Further, traders would expect the bottom line of the triangle to behave as significant resistance on the first retest. This was the reason that crypto Twitter insisted that Bitcoin would be strongly rejected at a retest of $6,000 from the bottom. We were screaming the opposite and publicly opening additional long positions. 

What happened? As you can see in the pink circle, price passed through $6,000 like a hot knife through butter — there was no supply to be found, which is what you would expect after the breakdown of a descending triangle. 

You can argue that BTC price swung around the triangle apex thereby avoiding supply, but at that point, you’re having to stretch for validation. There is another explanation for the consolidation, break and subsequent bull rush back up through what was believed to be significant resistance, but we will save that for next time.

BTC/USD chart

BTC/USD chart. Source: Tradingview.com 

Bitcoin price did ultimately continue down, which descending triangle maximalists used as clear evidence that they were correct. As mentioned before, the price was already in a clear downtrend, which is likely the reason that price dropped — simple trend continuation after consolidation. 

Price reacting in a manner you anticipate does not necessarily validate a chart pattern.

A pattern is not a pattern until it is confirmed

A descending triangle is nothing more than a consolidation pattern, and most often consolidation patterns result in a continuation of the trend. But never forget, a pattern is not a pattern until it is confirmed as one. 

This doesn’t happen until the requisite alternating touches of support and resistance print and volume plays out as required. Traders can do themselves a favor by trying to understand why a pattern exists (the underlying psychology that leads to the pattern formation), rather than just taking what appears to be a pattern at face value and slapping that designation on it without confirmation — and then trading it. 

In doing so, they are more likely to profit from that pattern. Contrary to popular belief, technical analysis is more than just the lines on the chart — it’s an understanding of the underlying causes that have formed those lines.

Source: cointelegraph

Bitcoin

Alibaba Denies Working With Bitcoin (BTC) Company or Support for Crypto: Report

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Contrary to an announcement made by Bitcoin cashback company Lolli, e-commerce giant Alibaba says it has no partnership with the platform.

Lolli announced on China’s Singles Day that its app now allows Alibaba shoppers to earn Bitcoin rewards.

According to a report by CoinDesk, however, Alibaba representatives are denying the partnership. Additionally, Alibaba clarifies that it does not support payments in BTC.

An Alibaba representative tells CoinDesk,

“One of Alibaba.com’s contractors hired a subcontractor who brokered an affiliate marketing program with Lolli. This was done without the knowledge of Alibaba.com. Alibaba.com’s contractor is terminating the relationship with the subcontractor who was working with Lolli. As a result, Lolli should no longer promote or bring traffic to Alibaba.com.”

Lolli’s head of communications, Aubrey Strobel, says Alibaba.com trialed the platform for 24 hours during the Singles Day campaign which drew attention as shoppers broke records and the day’s marketing event, an entertainment extravaganza featuring Taylor Swift, sparked global attention. Shortly thereafter “the partnership” was deactivated.

In a statement reviewed by CoinDesk, Strobel writes,

“It seems as though there was a miscommunication on Alibaba’s end and while that’s unfortunate, we look forward to the possibility of working with Alibaba.com again in the future. In the interim, Alibaba Group’s AliExpress is still live on Lolli.”

In the days following Singles Day, China is showing signs of renewing its crackdown on Bitcoin and cryptocurrencies. While President Xi Jinping has embraced blockchain in addition to removing cryptocurrency mining from a list of banned activities, rolling out mobile app lessons about Bitcoin and calling BTC the first successful use case of blockchain, the country’s anti-crypto stance has not entirely faded. It remains complex.

The Weibo accounts of leading cryptocurrency Tron and trading platform Binance were recently blocked for violating community regulations as China is rolling out new directives that are designed to squash the speculative trading of cryptocurrencies.

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Bitcoin drop below $8,500 may be tied down to USDCoin

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If one were to look at the unrelated rise and fall of Bitcoin vis-a-vis internal factors within the digital assets space, the relevance of stablecoins increases. Seen as a balancing tool for the volatile world of decentralized currency, the printing, volume and change in stablecoins is often tied to the rapid price movements of Bitcoin.

The recent drop below $8,500 was no different, however, it had a different stablecoin playing a tethering agent, and according to Santiment, a crypto-analytics service it wasn’t Tether [USDT]. Rather the stablecoin USDCoin should be given more weightage.

According to Santiment, the over $600 fall of Bitcoin observed on November 15 can be tied down the USDCoin’s “average age consumed in days metric, which spiked to its all-time high during the same period. They stated,

“#Bitcoin has fallen back below $8,500 for the first time in three weeks, and one likely foreshadow was $USDC‘s [USDCoin] largest “average age consumed in days” spike of all time.” 

The metric, although not used frequently in charting is used to determine the number of days, on average, that digital assets are not used before being transacted on a said date, as per the Santiment website. This metric looks at the “idleness,” of the blocks within cryptocurrency’s network and hence the days since the “last time said token moved.”

Santiment stated the three elements in this price move was Bitcoin, stablecoins and large whales. As Bitcoin is being moved between two exchanges, stablecoin movement can indicate future drops in price when “previewing,” activities of large -whales. They opined that this is most often on the sell-side, with a large number of organic buyers within the market. Santiment stated,

“This spike likely occurred from the result of a large amount of $BTC being transferred between exchanges, and stablecoins often indicate future drops in price with these types of spikes by previewing a whales’ plan to make a large (most often sell-related) move.”

At press time, Bitcoin is trading below $8,500 for the first time since it marked its biggest daily gain of over 40 percent on October 23, owing to Xi Jinping’s comments about China making headway in blockchain technology to ramp up its plan of issuing a digital currency tied to the Chinese yuan.

Source:ambcrypto

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Bitcoin News Today – Headlines for November 17

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news bitcoin
  • Bitcoin finds strong support around the lower $8k range
  • Bitcoin might experience another major dip before the next price rally
  • Bitcoin’s next rally might coincide with the forthcoming halving

Bitcoin News Today – Bitcoin (BTC) has been in a consolidation period for a long time now. The digital currency has been trading sideways with support around the $8,500 mark. That has been the major support level for Bitcoin (BTC) over the past week. Since the digital currency plunged below the $9k level, it has not posted any major upward and downward trend. Many believe Bitcoin (BTC) is consolidating for another major upward movement. However, some analysts believe that the reverse might be the case.

According to some analysts, the price of Bitcoin (BTC) will experience one more major downward correction in the short-term before it starts correcting higher. The analysts are pointing out that the next major rally is likely to coincide with the approaching halving of Bitcoin mining reward.

Bitcoin (BTC) Price Today – BTC / USD

#NamePrice
1Bitcoin(BTC)$8,646.92

Bitcoin Finds Strong Support

At the press time, the world’s largest digital currency by market cap is trading up marginally and its current value is $8,534. This marks the second day Bitcoin has been trading sideways around the $8,500 support level. The recent dips of the digital currency have proven that it presently has strong support within the lower $8k level. This is because BTC quickly tested the $8,400 mark before it found enough buying pressure to push it over the $8,500 mark.

The recent price action of Bitcoin (BTC) marks an extension of the slow grind downtrends that the digital currency has been facing since it plunged from its 30-day high of $10,600. The $10,600 mark was set as the height of the meteoric rally of Bitcoin that first started when it hit $7,300.

Bitcoin (BTC) to Experience One More Dip Before Halving

There is support around the present price levels of Bitcoin (BTC). However, analysts are watching closely for one more price dip before it returns to a level that has sufficient buying pressure to act as a catalyst for the next price rally, which could be around the $7k region.

In a recent tweet, a very popular digital currency analyst on Twitter – Mayne – gave his opinion regarding what is ahead for Bitcoin (BTC). His tweet says:

$BTC: One more down move I reckon. Take out this currency swing low, some more sideways, spring to fill the last of my bids then up. I am building a swing long down here so my stop is wide and my position size is calculated accordingly. Play safe!”

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