Up or down?
Double top on 4hr chart. Source: TradingView
Over the past month Bitcoin plummeted from $8,175 to $3,850, and then had a miraculous 80% rally up to $7,000. However, after reaching $7,000 there was immediate resistance. After resistance was met, the price was able to maintain strength at around $6,600 and even go back up above $6,900. As Bitcoin tested $7,000 for a second time it was met with even more stark resistance and the price immediately plummeted 7%. A lot of hope was lost for anyone who was bullish on Bitcoin as the $7,000 resistance proved too strong to break through. Furthermore, the four hour trading chart exemplified a double top pattern, which is an extremely bearish reversal signal. Because the price had bounced back 80% in less than a week, the double top pattern shouldn't be taken lightly. At the time of this writing, Bitcoin is currently trading at $5,925, which is an 18% drop in price since the double top has been formed.
Bitcoin has fallen through its price floor
Price floors and ceilings 4hr chart. Source: TradingView
Since the formation of the double top, Bitcoin's price has fallen through two major support floors. First, it fell through $6,400 with no recovery, and is now falling below the $6,000 to seek support at the $5,800 level. A last stand will be made at $5,200 if the previous support doesn't hold. If Bitcoin can't rally support at the $5,200 level, then don't be surprised to see it go sub $4,000.
A bullish projection
If Bitcoin can rally support at the $5,800 level then it could gain momentum and go above $6,000. The price will need to find its new price floor at $6,400 and re-test its $7,000 price ceiling once more to prove that it's gaining bullish momentum and this isn't a quick pump and dump.
A bearish projection
Bitcoin was able to recover 80% in less than 2 weeks, but the cryptocurrency has yet to prove since its conception that it can sustain dramatic, short-term growth. Monthly, weekly, and daily charts are looking ugly for the crypto. Currently, Covid-19 is shaking financial movers everywhere and there's more money leaving the global markets than entering them. If the price can't hold support at $5,800 then don't expect your portfolio to be flashing green in the short-term.
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DISCLAIMER: This site article does not contain financial advice. Any and all market analysis is solely the authors opinion.