Bitcoin (BTC) Double-Top Could Lead to a Short-Term Retracement

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In Brief
  • The Bitcoin price has created a double-top and is trading inside a parallel ascending channel.

  • Technical indicators are showing weakness.

  • The price is likely in the C wave of an A-B-C correction.

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The Bitcoin (BTC) price has increased significantly over the past two weeks but has created a bearish pattern in the short-term.



Technical indicators are also showing weakness, indicating a retracement could be in the cards.

Bitcoin Double-Top Implies Weakness

In the period between Oct 28-31, the BTC price created a double-top pattern near $14,000. The double-top is normally considered a bearish reversal pattern.



The pattern has also been combined with a significant bearish divergence in both the RSI and MACD. While the former is still trading above 50, the latter has crossed into negative territory — a sign that the short-term trend is turning bearish.

BTC Chart By TradingView

The shorter-term two-hour chart shows an even more pronounced bearish divergence in both the RSI and MACD.

In addition, BTC seems to be trading inside a parallel ascending channel and is currently sitting on the midline.

Besides the divergence, movement contained inside a parallel channel is most often corrective, allowing for the possibility of a drop. If so, the closest support would be at the ascending support line of the channel near $13,200.

BTC Chart By TradingView

Wave Count

In BeInCrypto’s Oct 30 BTC analysis, we stated that:

“The price has likely begun wave 4 and the three most likely levels for the wave to end would be at $12,683, $12,419, or $12,086. These targets correspond to the 1, 1.27, and 1.61 Fib levels of wave A.”

The short-term count (blue) suggests that the price has just begun the C wave, which would complete the aforementioned wave 4 (orange).

The most likely level for this wave to end would be between $12,430-$12,530, the 1.61 Fib extension of sub-wave a (blue) and the 0.382 Fib level of wave 3 (orange).

BTC Chart By TradingView

In the longer-term, another increase is expected after the completion of wave 4 which could take BTC towards $16,000.

The formation would be invalidated by a decrease below the wave 1 high at $11,093 and would be partially invalidated by a breakdown below the 2-4 line (dashed), currently near $11,300.

BTC Chart By TradingView

Conclusion

To conclude, the multiple bearish divergences and the presence of a double-top make it likely that BTC is correcting.

A breakdown from the channel would likely accelerate the rate of decrease, causing a sharp drop towards the targets outlined above.

For BeInCrypto’s latest Bitcoin analysis, click here!

Disclaimer: Cryptocurrency trading carries a high level of risk and may not be suitable for all investors. The views expressed in this article do not reflect those of BeInCrypto.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.
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Valdrin is a cryptocurrency enthusiast and financial trader. After obtaining a masters degree in Financial Markets at the Barcelona Graduate School of Economics he began working at the Ministry of Economic Development in his native country of Kosovo. In 2019, he decided to focus full-time on cryptocurrencies and trading.

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