Bitcoin’s price witnessed a major drop of 14% after breaching supports in over 5 days. However, the major breach in support occurred on August 13, when the price breached $11,229. The price has since collapsed by 8% and is currently at $10,459, further indicating a bearish trend in upcoming days.
Shorter Time Frame
Bitcoin has had a great run-up since July (refer chart). The price in this timeframe rose by 30% in 8 days, following which the price consolidated into a symmetrical triangle. The breakout from this pattern caused the price to trickle down at every major support, leading to the current price. However, looking at this price action from a slightly higher time frame of 4 hours, it shows formation of 2 patterns.
Why the Drop?
Looking at the CME chart of Bitcoin, it can be easily inferred that the price was merely filling the gap formed on August 3 and 4, between $10,665 and $11,070.
Descending Channel & Symmetrical Triangle
The Descending Channel has held for over 45 days and the price is on a downtrend and almost at center of the regression channel. Chances of price proceeding lower than $9,700 are less than likely. However, the price might easily hit $9,700 and bounce back. With this line of reasoning, likelihood of the descending channel holding up is bleak.
Adjusting the support lines, the pattern evolves into a pennant/symmetrical triangle.
This pattern would make a lot more sense as the current price action would respect the support lines as seen in the above chart. The price will continue to descend and breach support at $10,390 and reach $10,000. This would be a point of inflection for Bitcoin, a point where breakout will occur.
Direction of Breakout
Breakout direction is in limbo and could go either way,