Bitcoin price has been consolidating for the last three months straight, and the entire crypto market is watching and waiting for a direction to be chosen.
An important indicator is showing extreme weakness, claims one crypto analyst, and warns that a “bigger drop” could be coming, even despite Bitcoin having already closed 16 out of the last 21 daily candles red.
OBV Indicator Weakness Could Lead to Bigger Drop in Bitcoin Price
The leading crypto asset by market cap has been trading inside a symmetrical triangle for the last three months, and whatever direction it breaks out in could determine the direction of the trend in the future.
Currently, Bitcoin price is testing the bottom of the symmetrical triangle, where it has repeatedly bounced higher before stopping short of a breakout above. Bitcoin price has closed 16 out of the last 21 daily candles red, and a relief rally should be near.
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However, according to one crypto analyst, an important indicator could be signaling that a bigger drop is due, and with Bitcoin price already showing “weakness” near the bottom of its multi-month trading range, a “bigger drop” would cause the triangle to breakdown and possibly retest former lows.
The analyst bases the analysis on the OBV indicator, or on-balance volume. The OBV indicator is used to watch for changes to the flow of volume to help predict price movements before they occur. Volume is often said to “precede price” and the OBV indicator would help crypto analysts spot such a signal.
$BTC still in the same horizontal channel on the daily. OBV looking really weak and really struggling to stay in the channel. If OBV can't break up soon we could see a bigger drop. pic.twitter.com/NwMrJ8rk5z
— IncomeSharks (@IncomeSharks) September 24, 2019
The metric was first designed by Joseph Granville who described the indicator as “a spring being wound tightly.” When that spring begins to uncoil, price is launched in that direction.
The OBV indicator on Bitcoin price charts has fallen out of a “horizontal channel,” meanwhile price is still neatly contained inside the channel. The analyst says that if the OBV indicator cannot break back into the channel, a nasty drop will ensue.
If Bitcoin price does indeed drop, downside targets for the symmetrical triangle range from $8,500 to as low as $5,800 – which would be a retest of former bear market support. Should Bitcoin fall to such prices, a bounce from there would still be considered bullish and keep the integrity of Bitcoin’s bull run intact.
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But that’s if Bitcoin price ever gets there. Buyers are said to be locked and loaded with long orders at around $8,500, where most of the crypto market would be looking for a massive bounce. With so many crypto investors waiting to buy the dip in Bitcoin during a bull market, it is unlikely to ever see some of the lowest downside targets.