Bitcoin Weekly Forecast: If bulls lose control here, BTC could revisit $21,000
Bitcoin is showing a fractal formation on the lower time frame chart, indicating a potential trend reversal.
This development shows a retracement of the four-hour ineffectiveness at $21,440 that may reach $21,115.
A successful reversal of the $24,565 resistance level at the lower support would break the bearish thesis.
Bitcoin price is showing an interesting setup that may reveal its next movement. On closer inspection, their technical parameters support a bearish outlook for the leading cryptocurrencies. The most important fundamental development in cryptocurrencies.
However, it’s not all negative for the price of Bitcoin when investors consider the major developments that have occurred in the past week. Perhaps most significant is the entry of BlackRock, the world’s largest asset manager, into the cryptocurrency space through a partnership with US-based digital asset exchange Coinbase.
News of the update sent Coinbase shares up more than 10%.
Another major update is the announcement that on August 29, the Chicago Mercantile Exchange (CME) launched Bitcoin and Ether Euro futures. Despite this major development, Bitcoin price remained steady for several hours, but eventually fell below the 200-week simple moving average (SMA) at $22,794 and retested the 30-day exponential. Moving Average (EMA) at $22,499.
However, things are looking a bit grim now as this newly developed BTC fractal is predicting a bearish outlook.
Bitcoin price is poised for more pain
The Bitcoin price fractal is hovering around the 30-day EMA, and the last time BTC moved above this fractal, it was up nearly 13%, setting a local high at $24,296. This move was reversed over the next five days as the major cryptocurrency tried to use the recently rejected 30-day EMA as a lower support line.
What is interesting, however, is Bitcoin’s price action resulting in a downtrend: it formed a double top while BTC tried to use the 30-day EMA as a crutch to avoid its downtrend. After several days of trending below the aforementioned EMA, Bitcoin price once again broke through the 30-day EMA and rose 8%, only to reject the 50% retracement level at $24,565. This barrier is in the midst of falling 42% between April and June 2022.
Adding credence to this bearish outlook is the four-hour supply zone, from $23,383 to $24,194. Currently, the price of Bitcoin has already crossed this level, which is a potential short setup. However, investors may choose to be patient and wait for a retest of the $23,666 swing high for the double top formation.
Going forward, if BTC makes another double top at $23,666, the fractal will re-form and predict an impending crash.
Targets for this setup include the 200-week SMA at $22,749, followed by price inefficiency, or a gap in fair value at $21,440, and volume at $21,115.
This barrier is the highest traded level for BTC volume since April 2022. See attached chart below for more details. At POC, market participants can expect a huge increase in buying pressure and a battle between buyers and sellers. This struggle is the common theme of all emerging parallel channel fractals seen since early 2022. So if investors are looking for a short double top formation at $23.66, they should consider booking sales at $21,115.
Invalidation Scenarios for BTC
If investors are on board with the idea of shorting the Bitcoin price, they should also consider scenarios in which this thesis explained above will be invalidated.
The first invalidation scenario is for investors with tight stop-losses, ie., above the four-hour supply zone’s upper limit at $23,666. In such cases, if Bitcoin price decides to retest the one-hour FVG at $24,362, the aforementioned stop losses will be hit.
While this might seem bearish, market participants can either set a wider stop-loss or reenter short at $23,666.
The second invalidation scenario is much grimmer for bears than it is for bulls as it involves a flip of the $24,565 resistance level into a support floor. This development will indicate the resurgence of bullish momentum and invalidate the fractal formation.
In such a case, market participants need to heed the market signals and position themselves accordingly, aka long. This development could see BTC retest the $28,000 to $29,000 levels to form a local top.