Bitcoin (BTC) hit a local top of $48,200 between the 14th and 16th of August, but failed to break through the long-term resistance area. If the double top pattern forms, the cryptocurrency could undergo a short-term correction before resuming its bullish movement.
Bitcoin has risen from the $29,300 fund on July 20th. The asset managed to top higher at $42,600, followed by a low at $37,300. Last weekend, the BTC managed to make another top at $48,200.
The current structure clearly indicates a resumption of the uptrend on the daily chart. However, the price of BTC failed to overcome long-term resistance in the range of $46,800 – $48,000 (red rectangle). This is a confluence of the 0.5 Fibonacci retracement level measuring the entire downward movement from the currency’s historic high to the bottom of $28,800.
Technical indicators show the current uptrend has weakened. The RSI was rejected at the 70 line, is moving down and has already generated three bearish divergence impulses (red arrows).
The MACD is carrying lower positive momentum bars and is very close to entering negative territory (orange arrow). The Stochastic Oscillator is still in bullish territory but has formed a negative cross.
Double top and BTC future movement
The four-hour chart shows a short-term double top formation that formed between the 14th and 16th of August (blue arrows). This is a bearish formation that could initiate a BTC correction in the coming days.
If that happens, the downward movement could focus on two main areas – $42,600 and $37,300. The first target is the 0.382 Fibonacci retracement level and the area and the top made on January 8, 2021. Validating this level as support would be a bullish signal and another bottom higher than the previous one a continuation signal of the trend.
Meanwhile, the second target is the 0.236 retracement level, where the highest low mentioned in the previous section was generated. Keeping the price in this area is necessary for buyers to maintain the consistency of the current uptrend.
There is also a bullish scenario for the situation where the double top pattern would not be executed and the BTC price would continue to rise. The target of the move is the $51,000 level, which is the 0.618 retracement of the entire bearish move.
Replay of the $10,000 fractal graphic?
Cryptocurrency trader @Inmortalcrypto posted two charts on Twitter on Monday (16) that compare current price action with August – September 2020. This was the period when the BTC price peaked at $12,500, only to subsequently drop to the bottom of $9,800, consolidate for a month and a half, then begin another bullish momentum.
So similar to our analysis, the chart suggests a short-term correction that should lead to a deeper bottom than the previous one and a continuation of the BTC price compression for another month. If Bitcoin stays in its range and the fractal repeats, at least partially, a continuation of the uptrend in the fourth quarter of 2021 is possible.
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