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

2 mins
Updated by Kyle Baird
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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 Double Top
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 Parallel Chanel
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 Short-Term Count
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 Daily Count
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.
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Disclaimer

In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

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Valdrin Tahiri
Valdrin discovered cryptocurrencies while he was getting his MSc in Financial Markets from the Barcelona School of Economics. Shortly after graduating, he began writing for several different cryptocurrency related websites as a freelancer before eventually taking on the role of BeInCrypto's Senior Analyst. (I do not have a discord and will not contact you first there. Beware of scammers)
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