Bitcoin (BTC) on the Verge of Breakdown before positive Nvidia earnings release

Bitcoin (BTC) fell as much as 4.8% on Wednesday as the market underwent huge uncertainty before Nvidia earnings were released. Nevertheless, when better earnings than expected were announced, the $BTC price was able to recover most of its losses and ended the day back above major support.

Bitcoin or fiat currency?

Bitcoin continues to be tossed on a sea of market uncertainty and a lack of liquidity. While we know that liquidity is coming, in the form of the Federal Reserve ending its quantitative tightening program, and further rate cuts, it may not come soon enough to stop Bitcoin’s slide to even lower prices.

All this said, ‘uncertainty’ is the name of the game here. No one knows when the market will pick up again, but if or when it does, Bitcoin is likely to lead the rebound. 

Some doomsayers will probably say that the entire financial system is in the process of melting down. This could be true, but the Trump administration is armed with one hell of a bazooka to print money if things start going badly awry. 

With Bitcoin it is a waiting game. Any institution worth its salt should be buying into this weakness, and that goes the same for retail investors who have long-term conviction. If in doubt, just think which you would rather own over the next few years - fiat currency or Bitcoin?

Confirmation of a W pattern?

Source: TradingView

The short-term chart for $BTC illustrates how the price has been rejected from the descending trendline (faint dotted line) and is now at support. It can be noted that a W pattern has formed, and has broken to the upside. Could the price now be coming back to test the neckline in order to confirm the pattern?

The Stochastic RSI indicators are at the top and just about to cross back down. While this isn’t a good sign for the W pattern retest, as momentum heads downwards, if the bulls are able to keep the price above the neckline until the indicator lines reset, this would potentially be very bullish. On the other hand, if the price falls through and negates the pattern, it could go on to form a lower low. $86,000 could then be the next possible target.

Bottoming process taking place

Source: TradingView

The daily chart gives a perspective into whether the current price action is forming a bottom, and it rather looks like it is. Looking back at previous price action it can be noted that the two previous bottoms were formed by lengthening candle wicks to the downside. Also, the Stochastic RSI indicators mirrored those bottoms.

The fact that the price has strong horizontal support and the bottom of the descending channel to rest on makes it more likely that this will end up being a bottom.

Bulls and bears play their last cards

Source: TradingView

In Wednesday’s article the possibility of redrawing the major trendline was discussed. This would take the trendline slightly down, enabling it to line up better with the price action and putting the price on top of the trendline instead of below it. This would put a far more bullish slant on the chart above.

That said, there is still the issue of the indicator line in the RSI falling through the 44.00 support line. RSI action below this line is normally associated with bear market activity. The bulls need to turn this around quickly.

Other than that, it looks as though the $BTC price is going through a bottoming process. If this is a bottom, it is likely to be a high time frame bottom, which would probably mean a big new wave to the upside. Then it would be a case of can $BTC break through the 8-year ascending trendline? 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.