Bitcoin BTC/USD was bouncing up almost 3% higher in tandem with the general market on Monday, which was spiking about 2.7% higher.
The apex cryptocurrency was muted over the weekend, declining slightly on lower-than-average volume, which indicated consolidation.
Bitcoin’s most recent consolidation has been taking place within a triangle formation on the daily chart.
A symmetrical triangle pattern is created when a stock forms a series of lower highs and higher lows between a descending and an ascending trendline, which meet on the right side of the chart to form an apex. The pattern indicates that the bulls and bears are equally in control.
A symmetrical triangle is often formed on lower-than-average volume and demonstrates a decrease in volatility, indicating consolidation. The decreasing volume is often followed by a sharp increase in volume when the stock breaks up or down from the pattern, which should happen before the stock reaches the apex of the triangle.
- Aggressive bullish traders may choose to purchase a stock in a symmetrical triangle when the security reverses course on the lower ascending trendline, with a stop set if the stock rejects at the upper descending trendline of the pattern. More conservative traders may wait for the stock to break up bullishly from the pattern on higher-than-average volume.
- Aggressive bearish traders may choose to trade opposite to the bulls, entering into a short position on a rejection of the upper descending trendline and covering the position if the stock finds support at the lower trendline. Opposite to the bulls, conservative bearish traders may wait for the stock to break down from the lower trendline on higher-than-average bearish volume.
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The Bitcoin Chart: Bitcoin has been trading within a symmetrical triangle since Sept. 26, but has been holding above the lower ascending trendline since Sept. 21. Bitcoin is set to meet the apex of the triangle on about Oct. 10 and bearish and bullish traders can watch for the crypto to break up or down from the pattern on higher-than-average volume to indicate that the pattern was recognized.
- Over the course of the last three days, volume has been steadily increasing, which indicates the crypto is regaining interest. If Bitcoin closes the trading day near its high-of-day price, the crypto will print a bullish Marubozu candlestick, which could indicate higher prices will come again during Tuesday’s 24-hour trading session.
- If Bitcoin retraces lower on Tuesday, bullish traders will want to see the crypto hold above the lower ascending trendline of the pattern. Bearish traders will want to see Bitcoin break down from the triangle pattern, which could indicate the consolidation period is over and a downtrend will occur.
- Bitcoin has resistance above at $19,915 and $21,313.41 and support below at $17,580 and $16,000.