Home » Today Crypto News » Historical Bitcoin Fractal Pattern Hints At Crash Below $20,000

Historical Bitcoin Fractal Pattern Hints At Crash Below $20,000

A detailed analysis by renowned crypto analyst Rekt Capital has highlighted a recurring bearish fractal in Bitcoin’s historical price data, raising the prospects of a possible crash below the $20,000 mark. This pattern, which was infamous in 2019 and 2022, appears to be reemerging in the current 2023 market.

For those unfamiliar, the fractal indicator identifies potential turning points on a price chart by to emphasize repetitive price patterns. Simply put, a bearish fractal suggests a potential price decline. Such a pattern occurs when there is a peak price with two consecutive lower high bars/candles on the flanks. An up arrow typically marks a bearish fractal, indicating the potential for price decline.

This is why the Bitcoin price could fall below $20,000

The essence of this bearish pattern starts with a double top. Contrary to expectations, this double top is not validated with a dip below a significant support level. Instead, the price typically experiences a relief rally, forming a lower high, only to crash below the aforementioned support.

This support then turns into a new resistance level, causing the price to drop further. This series was observed in both 2019 and 2022, and the current market scenario in 2023 reflects the early stages of this pattern. Rekt Capital suggests the market is potentially in the middle of this bearish fractal, with uncertainty over where the relief rally could end.

BTC is available from early April to late August formed a double top pattern in the weekly chart. However, Bitcoin price remained above the neckline at around $26,000. Then, BTC started its relief rally in mid-August, pushing its price up to $28,600. “We’re probably in A to B [phase of the] bearish fractal,” the analyst added.

Bitcoin bearish fractal
Bitcoin bearish fractal | Source: X @rektcapital

Digging deeper into possible scenarios, the analyst believes Bitcoin’s price could rise to around $29,000 before falling further. Some key events to watch for include potential overextensions beyond the bull market support band. If Bitcoin fails to retest this band and hold it as support after the breakout, the bearish fractal will remain valid.

Another important point to keep an eye on is to revisit the lower high resistance. Even if the price crosses this resistance, a subsequent rejection would keep the bearish outlook intact. However, there are criteria that could debunk this bearish perspective: the bull market support band (blue) consistently holding as support, a weekly close above the lower high resistance ($28,000), and breaking the yearly highs of $31,000.

Lower High is also converging resistance with the 200 week MA
The lower high is associated with resistance during the 200-week MA | Source: X @rektcapital

Regarding other technical indicators, Rekt Capital highlighted that Bitcoin recently reached the 200-week MA. However, this moving average (MA) appears to be acting as a current resistance. Moreover, the 200-week MA lines up with the lower high resistance, which marks a crucial moment for Bitcoin’s price in the near future. Despite its macro-optimistic stance on Bitcoin, Rekt Capital warns that Bitcoin has yet to overcome the lower resistance at $28,000 on the 1-week chart.

On the daily chart, Bitcoin is hovering slightly above the 38.2% Fibonacci retracement mark. For Bitcoin to avoid a decline below the established trendline (shown in black), it is crucial that Bitcoin maintain a position above $27,372.

Bitcoin price
BTC hovers above key support, 1-day chart | Source: BTCUSD on TradingView.com

Featured image from Shutterstock, chart from TradingView.com

Leave a Reply

Your email address will not be published. Required fields are marked *

*

x

Check Also

Trump’s $TRUMP Coin Gala Under Fire: Lawmakers Push For DOJ Inquiry Ethics of Exclusive Dinner

ContentsCasten, Smith calls for DOJ inquiry in Trump GalaDemocrats $ Trump Dinner Questions on Ethics US Congressmen Sean Casten (IL-06) ...

Is Pi Network About to Miss the Bull Run? Insider Selling Raises Major Red Flags (Pi Network Price Prediction)

ContentsPI Price Prediction: PI may fall to $ 0.70 after breaking its trend line supportSubbd (Subbd) is planning to become ...

Jupiter Price Doubles to $0.61, $2.6B TVL indicates Uniswap Challenge

ContentsSolana’s Hidden Gem Return: Why Jupiter is back in the spotlightIs the $ Jup still underwellude despite a monthly 30% ...