The technical rebound of the king of cryptos soon to be put away in the closet? – While within range of major resistance in anticipation of an extension of its technical rebound, Bitcoin (BTC) is near its $20,000 support, not far from its lows of the year. And all that in less than two weeks. The return to the table of current uncertainties in the financial markets largely explains the relapse of the king of cryptos. And as if that weren’t enough, the FED once again demonstrated its determination to fight inflation with all its might during the intervention of its chairman. Jerome Powell at the Jackson Hole Symposium. This dashed the hopes of a decline in its monetary tightening in the short-medium term.
On the eve of a historically unfavorable month of September for risky asset classes, the threat of a recovery in Bitcoin’s bear run since its last ATH in 2021 is once again being felt. Especially since the beautiful summer dynamic has taken a hit. Now, the tension seems to be at its height so that the potential positive catalysts may well be absent this time.
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Bitcoin in weekly units – A second straight week of declines in sight?
Unless there is a last-minute change, we are going to give birth to a second consecutive week of falling Bitcoin prices. But what worries me more broadly is how quickly the gains in the technical rebound since mid-June are eroding. And in less than two weeks, we are practically at the support level of $20,000. This shows that the crisis of confidence in cryptocurrencies since last spring remains in the minds of investors.
Just to drive the point home, the last weekly candle simultaneously caused BTC prices to break below the Tenkan and the fall of the Chikou Span towards the $20,000 support. In turn, the king of cryptos moves away from the descending line of the bear run and sees its price position below the Kumo (Ichimoku cloud) sink deeply. Then, as bad news never comes alone, let’s not forget upstream the validation of the shoulder-head-shoulder (ETE) which still constitutes a brake on a trend reversal, at least for the year 2022.
Therefore, these ominous stars are perfectly aligned to promise hell for Bitcoin in the weeks to come. In the event of a depression of $20,000, the bear run would come back at a gallop. Given the nature of major risks in financial markets, the specter of new lows for the year would gain traction. The only unknown would be the magnitude of the decline.
Bitcoin in Daily Units – A Fully Validated Bearish Reversal Pattern
The triple bottom unfortunately did not have the desired effect. Indeed, Bitcoin prices are slipping below its $22,000 neck line. Now, they exit from the bottom of an ascending wedge.
As a reminder, it is a bearish chart pattern composed of two converging lines on the rise. Inside, the prices must touch at least twice each of them before a third point of contact which often proves to be decisive. In almost 80% of cases, the exit is bearish. With regard to the final theoretical objective, it corresponds to the low point of the bevel, or more precisely to the starting point having allowed the formation of the chartist figure.
It is clear that we are not too far from it. But looking closely at the daily chart, the bearish exit from the rising wedge has jeopardized the summer technical bounce. Because precisely, BTC prices find themselves sharply below Kumo, while the Chikou Span had already been there for several days. Thus, the odds of a threat below $20,000 would only increase. If the fourth attempt in daily units is the right one, the last bullrun would take quite a bit of time in the event of a return to the support… of $12,000.
In summary, Bitcoin seems to have lost track of its technical rebound since mid-June. To the point that many investors would be watching for a resumption of the bear run since its last ATH in November 2021. Not only are the current uncertainties on the financial markets continuing to get bogged down with a more restrictive FED than ever on its monetary policy. But from a strict seasonality point of view, September historically remains a high-risk month for risky asset classes.
Regarding the graphic aspect, I will keep an eye on the important thickness of the future Kumo in weekly units. It could prove to be a handicap if prices were to try to cross it in the near or distant future. And although I’m going prematurely, the trend would lean towards a next wave of declines in the event that the support at $20,000 is broken. Conversely, it would be imperative to get back into contact with the summer highs to hope to prolong the technical rebound.
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