Bitcoin Could Soon Plunge From $7,000: 2 Key Technical Trends Prove This
In the wake of the crash to $3,700, investors thought Bitcoin was on a certain path to fresh macro lows under $3,100. But, this has quickly changed as the cryptocurrency has embarked on a stunning recovery, reaching $7,500 last week on the back of hype regarding the May 2020 block reward halving.
Unfortunately, the 100% move from the “Black Thursday” low is coming to an end, with key indicators suggesting that a correction of the rally is imminent.
Bitcoin Is Preparing to Reverse: Indicators
Avi Felman — a trader and analyst at crypto-asset fund BlockTower — recently observed that there are two clean signs that a reversal in the cryptocurrency market is on the horizon:
- The Tom Demark Sequential, a time-based indicator that prints “9” candles to mark reversals, is printing a sell “9′ candle on the three-day chart. Previous three-day 9 candles marked the mid-March bottom and the December 2019 bottom, but front-ran the $10,500 top seen earlier this year.
- Ethereum is currently failing to break past the three-day 50 moving average and the 200 moving average.
It takes a brave man to stand here.
— Avi IS RIGHT (@AviFelman) April 16, 2020
There are also other traders that have similar sentiment, explaining that the signs are pointing to a move lower.
Trader DonAlt remarked that while the recent daily candles have not been “super bearish,” it is “awfully close to how the $10,000 top played out” pointing to structural similarities between that time frame in February of this year and now.
The asset following the playbook it made last time it saw such similar price action will see it tumble off a cliff in the coming weeks, likely to retest the lows.
Macro Perspective Also Suggests Yet Another Drop is Coming
The macro picture also suggests that the cryptocurrency may soon return to the downside.
Per previous reports from NewsBTC, Bitcoin analyst Dan Talmon suggested that Bitcoin’s bear market has seven distinct points and three distinct phases, depicted by the numbers and colors in the below chart.
The first phase is marked by a steep crash and bound; the second phase is short but sees the cryptocurrency crash again to set a new low; and the last phase is capitulation, where prices set fresh lows.
Adding to this, Ross Ulbricht — the early crypto adopter behind the online marketplace “The Silk Road” — suggested that Elliot Wave theory suggests BTC may fall under the 2018 lows. Elliot Wave is predicated on market cycles and investor psychology.
Related Reading: This One Financial Trend Will Make Bitcoin Succeed: Billionaire
Photo by Nik Shuliahin on Unsplash
Published at Sat, 18 Apr 2020 04:00:59 +0000 Bitcoin Could Soon Plunge From $7,000: 2 Key Technical Trends Prove This