Exclusive Bitcoin (BTC) Rejected by Resistance — How Deep Could It Fall?

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In Brief
  • Bitcoin has been rejected by the long-term resistance area at $48,200.

  • Technical indicators show a weakening of the uptrend.

  • BTC has a chance to repeat the bullish fractal from Aug-Sept 2020.

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Bitcoin (BTC) peaked at a local high of $48,200 between Aug 14-16 but was rejected by the long-term resistance area. If the double top pattern plays out, BTC could see a short-term correction before resuming its upward movement.

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Bitcoin has been moving upwards since the bottom at $29,300 on July 20. BTC managed to make a higher high at $42,600, followed by a higher low at $37,300. Last weekend, BTC recorded another higher high of $48,200.

The current structure clearly indicates a resumption of the uptrend on the daily time frame. However, the BTC price was rejected by the long-term resistance in the range of $46,800-$48,000 (red rectangle). This is a confluence of the 0.5 Fib retracement level measuring the entire downward movement from the all-time high and the macro low at $28,800.

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BTC Chart by TradingView

Technical indicators show a weakening of the current uptrend. The RSI has been rejected by the 70-line and is moving downwards and has already generated three drives of bearish divergence (red arrows).

The MACD is printing lower positive momentum bars and is very close to moving into negative territory (orange arrow). The Stochastic oscillator is still in bullish territory but has formed a bearish cross.

BTC Chart by TradingView

Double top and BTC future movement

The four-hour chart shows a short-term double top formation that was formed between Aug 14-16 (blue arrows). This is a bearish formation that could initiate a correction of BTC in the coming days.

BTC Chart by TradingView

If this happens, the downward move could focus on two main areas — $42,600 and $37,300. The first target is the 0.382 Fib retracement level and the area and the high made on Jan 8, 2021. Validation of this level as support would be a bullish signal and another higher low in the ongoing uptrend.

Meanwhile, the second target is the 0.236 Fib retracement level, where the higher low mentioned in the previous section was generated. Holding this area is necessary for the bulls to maintain the consistency of the uptrend.

There is also a bullish scenario for the situation when the bearish double top pattern would not be played out and the BTC price continued to rise. Then the target of the move is the $51,000 level, which is the 0.618 Fib retracement of the entire downward movement.

A repeat of the $10,000 fractal?

Cryptocurrency trader @Inmortalcrypto posted two charts on Twitter yesterday that compares the current price action with August-September 2020. This was the period when the BTC price peaked at $12,500, only to later fall to a bottom at $9,800, consolidate for a month and a half, then begin an upward impulse.

Source: Twitter

So similar to our analysis, the chart suggests a short-term correction that should lead to a higher low and a continuation of the BTC price compression for another month. If bitcoin stays in its range and the fractal at least partially repeats itself, a continuation of the bull market in Q4 2021 is possible.

For BeInCrypto’s previous Bitcoin (BTC) analysis, click here.

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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PhD and an assistant professor at an international university in Lublin, Poland. Spent 10 years studying philosophy of nature and sport science. An author of 4 books and two dozens of scientific articles. Now, he is using his mind for the benefits of the cryptocommunity. Technical analysis enthusiast, Bitcoin warrior, and a strong supporter of the idea of decentralization. Duc in altum!

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