The price chart for Bitcoin (BTC) is showing indications of a potential reversal in trend after forming a double top pattern. This month, the cryptocurrency has experienced significant volatility, reaching nearly $70,000, close to its previous all-time high in March, before retracing to $63,000.
This downward movement coincides with a decoupling from the upward trend of the Nasdaq, which has been further amplified by accelerated sales from miners and profit-taking by investors near the all-time highs. Additionally, there have been withdrawals from U.S. exchange-traded funds (ETFs).
The double top pattern is a well-known bearish technical signal in the financial market, characterized by two peaks with a trough in between. Typically, this pattern emerges after a significant uptrend. The second peak indicates exhaustion in the upward movement, and a confirmed break of support between the peaks could signal a shift towards a downtrend.
“From a technical perspective, Bitcoin appears to be forming a double top pattern as the support level is being tested. Unless invalidated, this chart pattern should be considered as our base case. This formation could potentially lead to a drop to $50,000, or even $45,000,” explained Markus Thielen, the founder of 10x Research. “While the U.S. elections and CPI may have a bullish impact later this year, we might still witness a more significant correction,” Thielen added.
As of the time of writing, the Bitcoin price stands at $61,404.04, experiencing a 4% drop in the past 24 hours and a 6% drop in the week.
On the other hand, a closer analysis of Bitcoin’s three-day chart reveals a potential reaccumulation pattern. Currently, Bitcoin is testing support levels, indicating the possibility of a substantial rally ahead.
This pattern suggests a consolidation phase followed by a strong price surge, potentially surpassing previous peaks. While this pattern does not guarantee future outcomes, it does provide a structured approach to assessing market dynamics and identifying emerging opportunities.
In general, the Bitcoin price is currently trading below the $62,500 resistance zone. To initiate a significant upward movement, BTC needs to establish a foothold above $64,500.
It is important to note that the opinions expressed in this article, whether by the author or anyone mentioned, are solely for informational purposes and should not be considered as financial or investment advice. Investing or trading cryptocurrencies carries the risk of financial loss.
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