The Bearish Fractal in Focus: Crypto expert Rekt Capital has shed light on a recurring bearish fractal in Bitcoin’s historical price trajectory, suggesting a possible dip below the $20,000 threshold. This pattern, previously observed in 2019 and 2022, appears to be making a comeback in the 2023 market landscape.
For the uninitiated, fractals in trading pinpoint potential pivotal moments on a price graph by spotlighting repeated price configurations. Essentially, a bearish fractal indicates a potential price drop, characterized by a peak price surrounded by two lower high bars/candles. This pattern typically signals a potential downward price movement.
Decoding the Potential Bitcoin Price Decline:
The core of this bearish configuration starts with a double peak. Contrary to popular belief, this doesn’t get confirmed with a drop below a crucial support level. Instead, a relief rally usually ensues, forming a lower peak, before plummeting below the aforementioned support.
This support then transitions into a resistance, pushing the price further down. This sequence was evident in 2019 and 2022, and the 2023 market seems to be echoing the early stages of this pattern. Rekt Capital postulates that we might be amidst this bearish fractal, with the relief rally’s endpoint still uncertain.
From April to August’s end, BTC showcased a double-peak pattern on the weekly chart, with the price maintaining above the $26,000 neckline. By mid-August, BTC initiated its relief rally, pushing the price to $28,600. The analyst suggests we might be navigating the initial phases of this bearish fractal.
Potential Outcomes and Indicators:
Delving into potential outcomes, the analyst speculates that Bitcoin could ascend to roughly $29,000 before facing further drops. Key events to monitor include potential stretches beyond the bull market support band. If Bitcoin doesn’t retest and uphold this band post-breakout, the bearish fractal remains in play.
Another pivotal aspect is the retesting of the lower high resistance. Even a price spike beyond this resistance, followed by a rejection, would maintain the bearish forecast. However, certain factors could negate this bearish view: consistent support from the bull market band, a weekly close above the $28,000 lower high resistance, and surpassing the $31,000 annual highs.
Discussing other technical indicators, Rekt Capital emphasizes Bitcoin’s recent surge to the 200-week MA, which seems to be the current resistance. This 200-week MA coincides with the lower high resistance, marking a vital point for Bitcoin’s imminent price direction. Despite a generally bullish outlook on Bitcoin, Rekt Capital warns of the $28,000 lower high resistance on the weekly chart.
In the daily chart, Bitcoin floats just above the 38.2% Fibonacci retracement level. To prevent a fall below the set trend line, Bitcoin must remain above $27,372.
