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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

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Bitcoin

Hodl Hodl Wants You to Clone Its Bitcoin Exchange

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Hodl Hodl plans to make its software freely available so anyone can launch their own version of the peer-to-peer bitcoin exchange.

Announced Saturday at the Baltic Honeybadger conference in Riga, Latvia, the plan is, in part, a recognition that Hodl Hodl’s business model is vulnerable to regulatory crackdowns.

“History teaches us that if a government wants to shut you down, it will,” Hodl Hodl CEO Max Keidun told CoinDesk.

Open-sourcing the code for its smart contracts, which Hodl Hodl intends to do sometime next year, is a way to deal with the threat, Keidun said, explaining:

“Let’s imagine, our domain gets blocked — some activist would be able to just take the code from Github, fork it and launch something new.”

Already, people in Africa, Asia and Latin America have reached out to the company, asking about such an opportunity, he said. “Peer-to-peer is something emerging markets, in particular, are interested in.”

Rare breed

Hodl Hodl is a rare animal in the 2019 crypto world: as a matter of principle, it focuses on bitcoin (the only cryptocurrency that the company’s founders trust), it doesn’t do know-your-customer (KYC) checks and it has no plan to start.

Why not? “Because we don’t like three-letter abbreviations,” Hodl Hodl’s CTO, Roman Snitko, joked in a slide for his presentation to the Riga conference.

In all seriousness, Hodl Hodl is averse to holding the sensitive personal information that financial institutions are mandated to collect from customers under global anti-money-laundering (AML) regulations.

“We think KYC/AML does more harm by exposing law-abiding users to fraudsters and criminals,” Snitko told CoinDesk. “The information and documents users upload to exchanges has been stolen many times in the past. It also does very little to prevent actual money laundering and criminals from using those services. They always find ways.”

Yet regulators across the globe are tightening the screws on the industry to identify the parties to transactions. Most notably, the Financial Action Task Force (FATF), an intergovernmental body, has directed its member countries to make exchanges collect and store information about who their customers trade with.

Winds of change

Hodl Hodl’s founders believe they don’t have to identify customers because the exchange never takes custody of users’ funds.

Rather, it lists offers to buy or sell bitcoin and provides an escrow service in which the seller locks bitcoin in a multi-signature smart contract until the buyer sends fiat. Releasing the bitcoin requires 2 out of 3 signatures, belonging to the buyer, seller, and Hodl Hodl (which steps in as a referee when there’s a dispute).

“We don’t touch the crypto, don’t match users automatically and don’t keep funds in our wallets,” Keidun said. “We create multisigs in a public blockchain,”

In the same June guidance, the FATF said even peer-to-peer platforms may be subject to such regulations in cases “where the platform facilitates the exchange.” It’s unclear whether Hodl Hodl’s escrow service counts as “facilitating.”

But the founders see the way the wind is blowing.

“We’re not switching to the open-source model exclusively because of the regulatory pressure,” Snitko told CoinDesk. “In fact, we haven’t experienced any due to the fact that we’re a non-custodial exchange. However, we do foresee regulators becoming more desperate in their attempts to contain the spread of bitcoin and we refuse to be the victims of desperate actions.”

Passing the reins

At some point, Keidun and Snitko might hand management of Hodl Hodl to others so they can focus entirely on supporting and upgrading the code. (The exchange says it has no head office; employees work remotely, serving 10,000 users worldwide.)

“We want to create a community around us, so that at some point we could pass the reins to other people,” Keidun said. There is no timeframe for that yet.

In his Riga presentation, Snitko also announced Hodl Hodl’s intention to open “a bitcoin smart contract app store.”

Another way people can utilize the code is payments for e-commerce, and in the coming months, the team will focus on making the technology plug-and-play, so people who are not proficient coders can easily deploy it in their online store and accept bitcoin.

“We want to launch a platform for bitcoin smart contracts, so that anyone who wants to sell homes online or do [over-the-counter] trades could use it,” Keidun said, adding that it might be a multi-sig with more than three signatures and it can be used for multiple use cases.

Aside from bitcoin-to-fiat trades, Hodl Hodl’s multi-sig escrow is used in a peer-to-peer predictions market when people bet on things like the price of bitcoin or publicly traded stock, sports results and other measurable outcomes. A real estate platform is also in the works, with a launch tentatively scheduled for 2020, Keidun said.

source.coindesk.

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Bitcoin’s Record Hash Rate May Hint at Price Gains to Come

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  • With the hash rate or miner’s confidence hitting record highs, bitcoin’s three-day narrowing price range looks set to end with a bullish breakout.
  • A range breakout would open the doors to $10,956 – the bearish lower high created on Aug. 20.
  • A break below Friday’s low of $10,154 would confirm a range breakdown and could yield a sell-off to $9,855 (Sept. 11 low).

Bitcoin’s latest bout of consolidation may end up with bullish breakout, as a key metric of miner confidence has hit all-time highs.

The top cryptocurrency by market value has clocked lower daily highs and higher daily lows over the last three days and is currently trading at $10,300 on Bitstamp, little changed on a 24-hour basis.

The cryptocurrency has charted the narrowing price range amid a surge in non-price metrics including a rise in the network’s hash rate – a measure of the computing power dedicated to mining bitcoin.

Notably, the two-week average hash rate reached a record high of 85 exahashes per second (EH/s) around 19:00 UTC on Friday. Further, mining difficulty – a measure of how hard it is to create a block of transactions – also jumped to a new all-time high of nearly 12 trillion.

Hash rate can be considered a barometer of miners’ confidence in the bitcoin price rally. After all, they are more likely to dedicate more resources to the computer intensive process that secures the network and processes transactions if they are bullish on price. Miners would likely scale back operations if a price slide is expected.

Hence, many observers, including the likes of Changpeng Zhao, CEO of Binance, and former Wall Street trader and journalist Max Keiser believe prices follow hash rate.

Zhao tweeted on Friday that, a rising hash rate means “more miners are investing in BTC,” while few other observers stated that sellers should think twice before betting against the most secure blockchain (the higher the hash rate of a cryptocurrency network, the more expensive it is to attack).

It is worth noting, though, that the market is divided on the relationship between price and hash rate.

Some observers believe the hash rate follows price and the metric’s stellar performance represents overtly exuberant miners.

That said, the price is likely to follow the hash rate this time, as over-exuberance is typically observed at market tops or near record highs. As of now, BTC is down almost $10,000 from the record high of $20,000 reached in December 2017.

Further, with the next reward halving (supply cut) due in less than a year, market sentiment is quite bullish. The sustained uptick in miners’ confidence is more likely to draw fresh bids, possibly leading to a positive feedback loop.

Daily and 4-hour charts

Bitcoin has charted (above left) back-to-back inside bar candlestick pattern on the daily chart over the last three days. The first inside bar appeared on Friday as that day’s high and low fell within Thursday’s trading range. The second and the third inside bar candle was created on Saturday and Sunday, respectively.

Inside bars indicate consolidation and lack of volatility, often ending with an explosive move on either side. A break below the first inside bar’s (Friday) low of $10,154 would imply range breakdown and could yield a stronger sell-off to levels below $9,855 (Sept. 11 low).

A break above Friday’s high of $10,458 would imply range breakout and open the doors to $10,956 (July 20 high).

The falling wedge breakout confirmed on the 4-hour chart (above right) last week is still valid. So, the probability of range breakout is high.

source.coindesk.

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Bitcoin (BTC/USD) forecast and analysis on September 16, 2019

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Cryptocurrency Bitcoin (BTC/USD) is trading at 10308. Cryptocurrency quotes are trading above the moving average with a period of 55. This indicates a bullish trend on Bitcoin. At the moment, cryptocurrency quotes are moving near the middle border of the Bollinger Bands indicator stripes.

Bitcoin (BTC/USD) forecast and analysis on September 16, 2019

As part of the Bitcoin exchange rate forecast, a test of the level of 10220 is expected. Where can we expect an attempt to continue the growth of BTC/USD and the further development of the upward trend. The purpose of this movement is the area near the level of 10850. The conservative area for buying Bitcoin is located near the lower border of the Bollinger Bands indicator strip at the level of 9950.

Bitcoin (BTC/USD) forecast and analysis on September 16, 2019

Cancellation of the option to continue the growth of the Bitcoin exchange rate will be a breakdown of the lower border of the Bollinger Bands indicator stripes. As well as a moving average with a period of 55 and closing of quotations of the pair below the area of ​​9840. This will indicate a change in the current trend in favor of the bearish for BTC/USD. In case of breakdown of the upper border of the Bollinger Bands indicator bands, we should expect an acceleration in the fall of cryptocurrency.

Bitcoin (BTC/USD) forecast and analysis on September 16, 2019 implies a test level of 10220. Further growth is expected to continue to the area above the level of 10850. The conservative area for buying Bitcoin is located area of 9950. Cancellation of the growth option of cryptocurrency will be a breakdown of the level of 9840. In this case, we can expect further the fall.

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