Bitcoin is showing signs that could replicate its 2019 trend, when its price was dropped by more than 50% per cent.
According to a fractal first identified by TradingShot, an independent trading analytics firm, Bitcoin’s downside correction move from its newly established record high of nearly $ 42,000 is very similar to its dip in June 2019. This risks putting BTC / USD at lower levels than the current ones.
“Note that both 2019 and today’s parabolic growths share some common characteristics,” analysts at TradingShot said in note published on Wednesday.
“Both increased by approximately + 385% from the last contact with the 1D MA50 to their respective peaks,” they added. “Both retreated from their peaks by approximately -30% at the low level before contact was made again with the 1D MA50. At the time of the 1D MA50 test, the RSI was in the Support Zone. “
Bitcoin tested the 50-day moving average as support on Wednesday, when its price dropped to less than $ 30,000. The cryptocurrency has returned to its positive side when faced with comparatively greater buying pressure. However, its bullish trend seemed limited due to a stronger U.S. dollar, reiterating TradingShot’s fears of a repeat of the 2019 fractal.
The company said BTC / USD would need to remain above 50-DMA if it is to keep its bullish outlook stable. But if the pair breaks down with support, then it risks falling to the next moving average in the queue – 100-DMA. As of now, it is close to $ 23,000, 45% below the Bitcoin record close to $ 42,000.
In the meantime, if BTC / USD remains above 50-DMA, your likelihood of continuing its recovery to $ 40,000 and beyond will increase.
Converging Bitcoin indicators
TradingShot’s 2019 fractal theory combines the bias with other technical indicators that, too, point to an even more bearish collapse in the Bitcoin market.
For example, BTC / USD is floating within what appears to be a descending triangle. Analysts see the pattern as an indicator of a bearish reversal at the end of an upward trend. Usually, the downside triangle’s downside target is as much as the maximum distance between the upper and lower trend lines.
In the case of Bitcoin, that distance is almost $ 13,000. That puts the cryptocurrency on its way to its 200-day moving average, which is close to $ 17,000.
Diverging Bitcoin Indicators
Meanwhile, Jonny Moe, an independent market analyst, notes that the Downward Triangle can also turn into a Downward Wedge pattern, which is bullish.
“I don’t think this is what we are facing, but it is worth recognizing, the positive argument here is that this is not a giant descending triangle, it is some kind of descending wedge pattern that would form a basically right bottom on where we are now” , he said.
In both cases, it appears that Bitcoin would test the 100-DMA again, as suggested by TradingShot.