Bitcoin (BTC) Price Technical Analysis: What You Need To Understand About The Current Price Movements Of The Queen Crypto





Bitcoin (BTC) is up 36% in two months, providing relief to battered bulls. However, according to Crypto Twitter, the rally has suddenly taken the shape of a bearish stance on the price charts and could be short-lived.

“BTC is consolidating within a rising wedge, which is a bearish pattern,” tech analysis enthusiast Milan Vojtek tweeted early Tuesday, echoing the sentiment of his compatriots on Twitter.

A rising wedge represents a restrained bounce between two converging trendlines connecting lower lows and higher highs. The converging nature of the trendlines indicates that volatility is decreasing as prices rise, a sign that the recovery is drawing to a close – and tension is mounting as sellers challenge the upward pressure.

Thus, the appearance of a rising wedge often causes traders to brace for further price decline. Chart-based traders typically take short positions – betting on the dips – when prices fall from the rising wedge, confirming a breakout. The analyst Nebraskagooner tweeted, “Really nothing to get excited about this after multiple rejections. Breaking the rising wedge would target a $21,500 area.”

The predictive power of technical analysis patterns is linked to their popularity, which means that these patterns can sometimes become a self-fulfilling prophecy; the more people plot the rising wedge, as is the case with bitcoin, the greater the chance of further decline.

Bitcoin continues to move in a rising wedge, a bearish pattern. (TrendSpider, Milan Vojtek)

Bitcoin has yet to break out of its rising wedge, but if it does, sales could bounce back, as Crypto Twitter fears. The setup also caught the attention of savvy traders.

“Bitcoin has managed to hold up much better than I expected, but the outlook appears to be the same,” Michael Kramer, founder of Mott Capital Management, wrote in a market update published Sunday. “A bullish wedge pattern is forming within the bearish flag pattern, reinforcing the case for this lower drop and potential test of $16,400. »

Only macro and fundamental factors can make or break patterns. Much to the disappointment of bitcoin bulls, macro factors appear to support the wedge breakout hypothesis. ING analysts expect financial conditions to tighten ahead of the US Federal Reserve policy meeting on September 20-21.

Financial terms are determined by the US dollar exchange rate and bond yields. A rising dollar and bond yields mean financial conditions are tightening, a bearish move for risky, cash-addicted assets like stocks and cryptocurrencies.

“Expect financial conditions to tighten in the coming weeks and months. After all, this is what the Federal Reserve wants and needs,” ING analysts wrote in a blog post on Monday. According to ING, financial conditions in the US were very tight at the end of June, but have eased considerably since then.

Analysts at ING add that the Fed hopes to tighten financial conditions, “otherwise the Fed will be in a less comfortable position to push for a tightening of financial conditions, either verbally or through policy.” “.

The US dollar is already rising. The dollar index, which tracks the dollar’s value against major fiat currencies, approached 107.00 early in the day, extending its rally from last week’s low of 104.63.

The 10-year Treasury yield remained above 2.8%, having reached a low of 2.67% following the release of the US Consumer Price Index last Wednesday. The resistance in yields suggests that risky asset traders may mistakenly conclude that inflation in the United States has peaked and that the Federal Reserve is likely to slow down liquidity tightening in the coming months.

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ThomasE.
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