Bitcoin (BTC) peaked at a local high of $48,200 between Aug 14-16 but was rejected by the long-term resistance area. If the double top pattern plays out, BTC could see a short-term correction before resuming its upward movement.
Bitcoin has been moving upwards since the bottom at $29,300 on July 20. BTC managed to make a higher high at $42,600, followed by a higher low at $37,300. Last weekend, BTC recorded another higher high of $48,200.
The current structure clearly indicates a resumption of the uptrend on the daily time frame. However, the BTC price was rejected by the long-term resistance in the range of $46,800-$48,000 (red rectangle). This is a confluence of the 0.5 Fib retracement level measuring the entire downward movement from the all-time high and the macro low at $28,800.
Technical indicators show a weakening of the current uptrend. The RSI has been rejected by the 70-line and is moving downwards and has already generated three drives of bearish divergence (red arrows).
The MACD is printing lower positive momentum bars and is very close to moving into negative territory (orange arrow). The Stochastic oscillator is still in bullish territory but has formed a bearish cross.
Double top and BTC future movement
The four-hour chart shows a short-term double top formation that was formed between Aug 14-16 (blue arrows). This is a bearish formation that could initiate a correction of BTC in the coming days.
If this happens, the downward move could focus on two main areas — $42,600 and $37,300. The first target is the 0.382 Fib retracement level and the area and the high made on Jan 8, 2021. Validation of this level as support would be a bullish signal and another higher low in the ongoing uptrend.
Meanwhile, the second target is the 0.236 Fib retracement level, where the higher low mentioned in the previous section was generated. Holding this area is necessary for the bulls to maintain the consistency of the uptrend.
There is also a bullish scenario for the situation when the bearish double top pattern would not be played out and the BTC price continued to rise. Then the target of the move is the $51,000 level, which is the 0.618 Fib retracement of the entire downward movement.
A repeat of the $10,000 fractal?
Cryptocurrency trader @Inmortalcrypto posted two charts on Twitter yesterday that compares the current price action with August-September 2020. This was the period when the BTC price peaked at $12,500, only to later fall to a bottom at $9,800, consolidate for a month and a half, then begin an upward impulse.
So similar to our analysis, the chart suggests a short-term correction that should lead to a higher low and a continuation of the BTC price compression for another month. If bitcoin stays in its range and the fractal at least partially repeats itself, a continuation of the bull market in Q4 2021 is possible.
For BeInCrypto’s previous Bitcoin (BTC) analysis, click here.
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