Jacob reported that bitcoin broke down with much more velocity than most anticipated, and currently, it is in a consolidation phase. Rectangle formation on the BTC chart has defined support and resistance levels. The formation is defined with the level of support and resistance that acts as a ‘pause’ or ‘congestion’ in the middle of a trend.
Currently, the resistance level in the rectangle formation is at $8,600, and the bottom of the rectangle is at $7,800. Jacob reported that if the price breaks below the rectangle, a measured move will take the price to $6,400 level.
Jacob advised not to short support, which is at $7,800. He suggests getting your longs in support and shorts at the resistance as it would lower the risk considerably. The other strategy he proposed is to wait for the trend to develop and show itself.
According to Jacob, the rectangle formation is mostly seen as a continuation pattern by classic technical analysts and traders, but it can also a reversal depending on volume flow. Currently, bitcoin is trading at $8,240. From the last couple of weeks, the price of the leading cryptocurrency has been hovering around $8,000 mark. The breakout from the rectangle pattern is likely to provide traders a clearer picture of BTC price.