Focusing on the Bearish Fractal: An expert in cryptocurrency, Rekt Capital, has highlighted a recurring bearish fractal in Bitcoin’s historical price movement, suggesting a possible drop below the $20,000 threshold. This pattern, previously observed in 2019 and 2022, appears to be resurfacing in the 2023 market.
Fractals in trading identify potential turning points on a price graph by highlighting repeated price patterns. In this case, a bearish fractal indicates a potential price decline, characterized by a peak price surrounded by two lower high bars/candles. This pattern typically indicates a possible downward price movement.
Analyzing the Potential Bitcoin Price Decline:
The core of this bearish pattern begins with a double peak. Contrary to popular belief, this confirmation does not occur with a drop below a significant support level. Instead, a relief rally often follows, forming a lower peak before falling below the previous support level.
This support level then transitions into a resistance, pushing the price further down. This sequence was evident in 2019 and 2022, and the market in 2023 seems to be showing similarities to the early stages of this pattern. Rekt Capital suggests that we could be experiencing this bearish fractal, with the endpoint of the relief rally still uncertain.
From April to the end of August, BTC displayed a double-peak pattern on the weekly chart, with the price staying above the $26,000 neckline. In mid-August, BTC began its relief rally, pushing the price to $28,600. The analyst believes that we might be in the initial phases of this bearish fractal.
Potential Outcomes and Indicators:
When considering potential outcomes, the analyst speculates that Bitcoin could rise to around $29,000 before experiencing further drops. Key events to monitor include the possibility of surpassing the bull market support band. If Bitcoin fails to retest and maintain this band after a breakout, the bearish fractal remains relevant.
Another important aspect is the retesting of the lower high resistance. Even if the price briefly exceeds this resistance level before being rejected, the bearish forecast still holds. However, certain factors could counter this bearish view, such as consistent support from the bull market band, a weekly close above the $28,000 lower high resistance, and surpassing the $31,000 annual highs.
Regarding other technical indicators, Rekt Capital emphasizes Bitcoin’s recent surge to the 200-week moving average (MA), which is currently acting as resistance. This 200-week MA coincides with the lower high resistance, making it a crucial point for Bitcoin’s upcoming price direction. Despite the generally positive outlook on Bitcoin, Rekt Capital warns about the $28,000 lower high resistance on the weekly chart.
In the daily chart, Bitcoin is hovering just above the 38.2% Fibonacci retracement level. To avoid dropping below the established trend line, Bitcoin must remain above $27,372.
