2020-7-11 11:27 |
Bitcoin is at risk of undergoing a significant breakdown as it consolidates inside a compressive technical pattern. The analogy surfaced as an analyst compared Bitcoin’s latest trend with the one from 2019. He noted that the cryptocurrency consolidated inside a similar Symmetrical Triangle range last year before breaking down towards $6,500 from $14,000-top. As Bitcoin’s modest rally this week comes to halt, analysts have started expressing their worries of a bigger downside move ahead. Cryptocurrency trader Josh Rager shared a BTCUSD chart Friday morning that showed the pair trending inside a contracting trading range. The pattern looked like a Symmetrical Triangle, confirmed by two converging trendlines connecting a series of Bitcoin’s sequential peaks and troughs. Mr. Rager pitted the pattern against its twin from 2019. Right after Bitcoin established a year-to-date top near $14,000, it started consolidating inside a Symmetrical Triangle-like fractal. The outcome was a negative breakout. The BTCUSD pair broke below the lower trendline in September and crashed towards $6,500 in the next three months. Bitcoin repeating the 2019 fractal hints of a breakdown move ahead. Source: Josh Rager, TradingView.com Mr. Rager also discussed events that led to the formation of these Symmetrical Triangles. The 2019’s top of $14,000 followed a parabolic uptrend from Bitcoin’s bottom near $3,120 – established in December 2018. Similarly, the cryptocurrency rose to circa $10,500 this year after bottoming out near $3,800 in March 2020. “It’s almost time,” Mr. Rager said in a cryptic tone. “Two moves from $3k to over $10k. Both with compression at the top.” That Missing Bitcoin Buying Sentiment The 2019 fractal saw an absence of new buyers at the $14,000-top. That led to a massive price correction towards $9,000, followed by another attempt to retest the YTD high. However, the price could only go as far as $13,200. The same happened in 2020. Bitcoin topped at $10,500 but failed to extend its upside momentum in the wake of higher selling pressure. The price later corrected towards the $8,600-9,000 range multiple times. It attempted a rebound towards $10,500 but got stopped near or below $10,000. Bitcoin’s upside attempts remain capped by a long-term descending trendline resistance (red). Source: TradingView.com The downside risks remained higher also because of a long-term Descending Trendline pattern. Since 2017, Bitcoin has attempted but failed to close above the ‘red’ trendline. It psychologically prompts traders to reduce their bullish exposure above the so-called price ceiling. Combined with Josh Rager’s “compression” fractal, these technical indicators hint that Bitcoin may break bearish in the coming sessions. One Bullish Indicator, Meanwhile Switching the BTCUSD timeframe from daily to weekly paints a rather bullish picture for the pair. So it appears, Bitcoin has printed a Golden Cross – a technical indicator that hints about a buying session ahead. Meanwhile, its weekly RSI is also holding support above 52 – historically bullish. Bitcoin Golden Cross and RSI readings suggest a sustained bullish bias. Source: TradingView.com At best, the weekly chart indicates that Bitcoin may fall towards its 50-week moving average (the blue wave) for a potential pullback towards the descending trendline. It may lead up to a price breakout, with the next resistance range lurking around $11,500-$12,000. Meanwhile, breaking below the 50-WMA could lead prices towards lower $6,000s – just like Josh Rager’s fractal suggests. Photo by Joanna Nix-Walkup on Unsplash
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