Bitcoin prices have retreated from this year’s highs as traders book profits and trade-related risks persist.
summary
- Bitcoin price is forming an ascending wedge pattern on the weekly chart.
- A bearish divergence pattern is also forming.
- An average reversal could push it below $60,000 in the near term.
Bitcoin (BTC) traded at $109,500 on October 23rd, down from a year-to-date high of $126,200, wiping out billions of dollars in value. A closer look at the weekly chart shows that this coin has formed a number of bearish patterns that could push it to levels below $60,000.
Technical analysis of Bitcoin price
The weekly timeframe chart shows that BTC price has retreated and entered a correction after falling more than 10% from this year’s high.
A closer look shows that the price is forming a very bearish ascending wedge pattern that could lead to further downside. This pattern started forming in December when Bitcoin broke above the key resistance at $105,000.
The bottom line is the lowest level since September of last year. Most of the time, a bearish breakout occurs when two lines approach a confluence, which has already happened.
The target price for a wedge pattern is estimated by measuring the widest section and the same distance from the breakout point. In this case, the widest point is about 45%. Measuring the same distance from the breakout point, the price target is $58,890.
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There are other bearish factors in the Bitcoin price. For example, the price remains well above its 200-week moving average of $64,786. This indicates that mean reversion, a situation in which an asset returns to its historical average value, can occur.
Additionally, the coin is forming a bearish divergence pattern as the relative strength index, true strength index, and percentage price oscillator are falling as the price rises.
Therefore, a combination of a mean reversal, an ascending wedge pattern, and a bearish divergence indicates a breakdown. The bearish forecast will be invalidated if the price breaks above the year-to-date high of $126,200.
BTC price chart |Source: crypto.news
BTC price has experienced similar drawdowns before
If the price of Bitcoin crashes to $58,000, it would be a 55% drop from its all-time high. This is a big drop, but the coin has experienced similar or even bigger drawdowns before.
For example, Bitcoin has fallen 77% from its 2022 high to a low of $15,392. This crash occurred as FTX and Terra crashed and the Federal Reserve raised interest rates to multi-decade highs.
Most recently, Bitcoin prices fell 34% from its high in December to its low in April. Bitcoin also fell by 55% from its high in April 2021 to its low in June of the same year.
All of these dips were good entry points as the coin has always rebounded.
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