Disclaimer: The findings of the following analysis are solely the views of the writer and should not be regarded as investment advice
Bitcoin has seen a good surge since September. In fact, the price surge has been more than hyperbole since December 12. Unsurprisingly, this surge could be something to be wary of as Bitcoin performance in Q4 averages 19% [from 2014 to 2019]. Furthermore, the highest return was during the 2017 bull run when Q4 surrendered 210% in returns.
The following article will look at the price of Bitcoin from a medium to short term perspective.
Bitcoin 1 day chart
Source: BTCUSD on TradingView
The chart attached here is a summary of the latest surge starting from the end of September to date. The surge in the above schedule formed an expansion wedge. More importantly, the price had twice hit the top of the wedge twice and looking at it, it seemed likely that a price would be back.
Rationale
As mentioned, the price from the top of the expanding wedge seemed likely, which is one reason for being short-term bearish on Bitcoin. Going forward, parabolic surges usually tend to end in arrears of 23.6% or 38.2%. Coincidentally, it seemed to have a good support area of 23.6% -Fibonacci level or $ 19,910.
Plus, the range from $ 19,910 to $ 19490 was a pocket of liquidity – we can expect Bitcoin to fall short into this territory. However, if it blows past this range, then we can expect Bitcoin to go lower, ie up to the Fibonacci level of 38.2%.
The RSI and the Stochastic indicator were in the over-thinking zone, suggesting a reversal in action, which in itself looked bearish. In addition, the bearish difference between price and RSI makes it more compelling for the price to go lower.
Levels to look out for
Admission: $ 23332.41
Stop-Loss: $ 24508.74
Taking Profit: $ 20468.21
Risk-to-Reward: 2.43
It should be noted here that there was an opportunity to see 18,437, should the fall continue. Care should therefore be advised not to pre-emptively shorten the short.