Bitcoin (BTC) Relief Rally May Surge Another 6%; But What Next?
If history is any indicator, the rising wedge pattern breakdown may cause a drastic downfall in Bitcoin price. Since the beginning of 2022, this particular pattern has emerged twice, and the result of the previous two caused 30-40%. Thus, if market action follows this pattern theory, the BTC price may plunge below $19000 and dive to a new lower low.
Key points BTC analysis:
- The Fibonacci indicator reflects the BTC price has fallen below the 50% retracement level
- The 20-day dynamic support flipped to a possible resistance
- The intraday trading volume in Bitcoin is $25.3 Billion, indicating a 27.3% loss
Source-Tradingview
On August 16th, the BTC price gave a bearish breakdown from the rising wedge pattern signaling the end of the short-term recovery. The resulting downfall aligned with the news that US Fed may increase its interest rate in September by 0.75, triggering a significant retracement.
The post-retest fall accounted for a 12% loss which pulled the BTC price to $20785 with local support. However, following such a steep drop, the price has slightly recovered in the past two days, registering a 3% gain.
However, despite rising prices, the volume activity is depleting, indicating weakness in bullish commitment. Thus, with sustained buying, the BTC price will likely test the flipped resistance of $22600, which may replenish the bearish momentum.
The expected reversal from the $22600 would encourage sellers to break down from the $20785. Moreover, the technical setup for wedge pattern breakdown has set the ongoing downfall to breach the June-July bottom support of $19000 and reach $16000.
While things look better for sellers, if buyers wrestled trend control from sellers at $22600 resistance, a possible breakout may allow bulls to resume the recovery rally above $25000.
Technical Indicator
Bollinger band indicator: the BTC price pierced the indicator’s lower band during the recent drop, indicating selling pressure was too sudden for the given time. Thus, the indicator supports the relief rally theory before prices continue to drop lower.
MACD indicator: the wide spread between the fast and slow line accentuates the aggressive selling pressure in the market. Moreover, these slopes are on the verge of falling below the neutral zone, indicating an additional confirmation for extended downfall.
- Resistance level- $22580 and $25000
- Support level- $207850, and $19000
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