Bitcoin could be due for a reversal from its longer-term climb as a double top pattern may be forming on its 4-hour time frame. The price has a lot of ground to cover before testing and breaking the neckline, though.
The 100 SMA is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. In other words, the uptrend is more likely to gain traction than to reverse. However, the price is already breaking below the 100 SMA dynamic inflection point to signal that bearish pressure is picking up.
Price could head south to the 200 SMA dynamic inflection point around the $10,500 mark next. A move below this could lead to a drop below the pattern’s neckline to signal that a reversal is in the works. The chart pattern spans $9,500 to around $13,500 to signal that a selloff of the same height might follow.
RSI is already in the oversold region to show that selling pressure is already exhausted. Turning higher could signal that buying pressure is returning and that a bounce to the nearby resistance levels might follow. Stochastic is also drifting close to the oversold region to signal that bears might be exhausted soon, and turning higher could show that buyers are ready to return.
BTC/USD Chart – TradingView
Bitcoin appears to be losing steam on its recent rallies as traders grow wary of waiting for more catalysts that could take it past the recent highs. Fundamentals remain supportive of more gains but investors might be keen on booking profits first then just reopening positions at better levels instead.
It didn’t help that the US central bank has raised concerns about Facebook’s Libra, which implies similar concerns about other cryptocurrencies. According to Powell:
“Libra raises serious concerns regarding privacy, money laundering, consumer protection, financial stability…These are concerns that should be thoroughly and publicly addressed.”
Images courtesy of TradingView
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