Bitcoin has seen a tumultuous past week, trading predominantly sideways, within a clearly defined local range. Almost exclusively directionless, the price action has instead taken the form of a grinding ever so slight sideways move. This contractionary phase comes after being rejected from a recent swing high, with bulls and bears now waiting on the potential breakout catalyst.
After a surge of bullish momentum over the weekend, Bitcoin’s price hasn’t had much directional conviction through the rest of the week. The swing failure pattern at the recent high put the current trading range into place. This event distinctly marks the limits of the current boundaries of the continuing phase of consolidation. The rejection from the swing high shows that there is a short-term roof forming for Bitcoin’s price.
Unless we see a sharp volume increase or wild card event, Bitcoin will likely remain stagnant in its present price range. This low-volatility environment should continue for the near-term, and potentially as far as into the weekend and Monday/early Tuesday next week. This mean-reverting behavior is indicative of Bitcoin still being range-ridden, a sideways structure we anticipate to persist on the shorter timeframes.
The relatively small and well-defined local trading range has added a layer of calm to a usually uncertain market. This balance is a tenuous one. A new wave of buying or selling pressure would make a breakout or breakdown much more likely. Most traders have one eye on volume and one eye on price action right now. They are looking for signals to find out what might be the next big move.
