Despite a lot of recent turmoil with equity markets, Bitcoin has been surprisingly stable. We haven’t seen any significant movements over the past weeks, but it looks like that is about to change. Bitcoin seems ready for a large symmetrical triangle breakout which could push prices to highs not yet seen for the cryptocurrency. Although, it is possible that prices could go the other way as well.
Since June, we have watched Bitcoin’s prices move between $9000 and nearly $14000. Trading has been narrow and movements between highs and lows have been relatively consistent, showing that Bitcoin has been in a symmetrical triangle – a condition where neither bulls nor bears have the desire to fully commit.
There is a significant decline in volume, as well. During the third week of June, there were nearly 1.32 million Bitcoins trading and a mere 500,000 over last week. The highest volumes are shown at the beginning of the symmetrical triangle and the lowest at the end. In a similar condition to narrow trading, the drop in trading volume shows that there is not enough will from bulls or bears to push the price significantly up or down.
Symmetrical Triangle Breakout Imminent
Thinking of a symmetrical triangle as purely symmetrical would be a mistake. Although the name suggests that pattern will end up with symmetrical sides, the truth is somewhat more complex than that. If two trendlines are formed that will intersect at some point, the shape can be termed a ‘symmetrical triangle’. Bitcoin’s current symmetrical triangle will be complete in late September, and that means the triangle is approximately 2/3 finished. Symmetrical triangles breakout, quite predictably, between the 2/3 and 3/4 range which means we are due for a breakout within the next week or two. Once Bitcoin breaks out, we will see much more volatility with the world’s biggest cryptocurrency.
Looking further at symmetrical patterns, we know that the shape is not as indicative of predictable movements as many other technical patterns are. However, there are good odds that show that certain conditions point to predictable outcomes. For example, when there is a bullish pattern leading up to the symmetrical pattern, bulls have another run once the triangle has broken out, more than 50% of the time. Looking at Bitcoin’s current case, it seems we can expect another bull run once the coin breaks out.
The expected rise (or fall) to occur after a breakout is usually the same as the price differences between the bottom ‘legs’ of a symmetrical triangle. The price difference seen on Bitcoin’s current triangle is nearly $4,700 which means a gain at that rate could push prices to over $18000. Of course, there is no guarantee and it is also possible that we will see a bear run that would reduce current prices by the same rates. Because of the obvious risk involved, it is clearly better to wait for the breakout and see what will happen. While there’s always a chance that no large changes will take place in the prices, the more likely scenario points to a significant gain.