Triangle nearing end, what will happen in yall's opinion?

  • This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn more.

stellarowl12

Administrator
Staff member
Jan 30, 2018
80
65
18
#1
Breakout is likely to happen - 70% downwards, 30% upwards IIRC? What do yall think? Or do yall draw the chart differently and see it as a wedge instead of a triangle? I've seen some traders saying that it is a wedge and not a triangle per their charts...
 

Adriaan Admin

Administrator
Staff member
Jan 30, 2018
231
56
28
www.bitcoinforbeginners.io
#2
Yeah, I have seen some making a wedge out of it, I think that is just wishful/biased thinking, which is a common pitfall for traders. On the other hand indeed some charts do show patterns that can be drawn differently with different conclusions. I personally find the case for Bitcoin's descending triangle much more convincing, especially because it is a widely accepted view (among everyone, not only the people that draw triangles) that bitcoin isn't able to break the 6k floor, which means that everyone accepts that we should view the 6k range as horizontal; and the descending trend line is hard to argue about either. Where should the precise triangle bottom line be drawn? That indeed is debatable, which means I tend to go with a range between 5.8-6.2k, but for an absolute line I would draw at 6k (middle of the range). Now I would personally not consider the triangle downwards broken unless it is convincing, which imho opinion means at least a daily close below 5.8k but maybe you wanna wait for confirmation on a weekly close.

The fact that the price is moving so far in the triangle also has other implications: indeed the probability is increasing that it won't break downwards (30%), which leaves 2 options: either it just moves out the triangle in sort of a trading range which will ultimately invalidate the descending triangle AND could establish 5.8k as the absolute bottom, IF no other bearish patterns or capitulation occurs; it could then form a rounded bottom.

The other implication is that according to original TA theory on descending triangles, if the price moves very near the triangle end point and breaks down from there, the price move down may be less violent than if it breaks down no further than 2/3 of the pattern. If this part of the theory still applies or is valid with regards to descending triangles, I wouldn't know for sure, just something to keep in mind.

A contrarian move the could also happen is that it indeed breaks to the upside, which could make it even more treacherous, because if we also break the latest high of 7.4k we will then be in official bull trap territory until about 18k, although we can become a bit more confident about that move once we clear 10k, but still it will be very dangerous to go full blown bullish and some form of risk management should prevent disaster if it occurs.

So IF the descending triangle actually breaks, the official price target was initially 3k, but now that we are so far in the triangle (and assuming the original theory still applies), it could very well be that the real bottom will become 5k after all (of course I wouldn't bet on it, but that scenario would make a lot of sense to me).