It has been a considerable amount of time since we’ve taken a real, in-depth look at the price of Bitcoin but we’re going to do so now. Pardon the delay, there were many upgrades that needed to be made to the brand before continuing forward.
Above is a potential scenario that traders should be wary of when evaluating Bitcoin’s future price action.
The setup appears to be a perfect lead into a double top formation.
Quick Review: What is a Double Top?
One thing to remember is that this is a reversal pattern, which means there must have been a prior trend in order for the pattern to be considered valid.
Below are a host of qualifications from the above source that maps out the usual conditions associated with a double top chart formation:
Assessing Whether This Chart Pattern Will Play Out
The next step here is to assess whether or not this chart pattern will actually play out in the expected manner.
In order to assess this, we’re going to need to look at some momentum indicators for Bitcoin.
Relative Strength Index(RSI)
As we can see in the chart above, the RSI(14)[on the daily resolution] has been lackluster to say the least, exhibiting a steep decline from the height that was reached on June 26, 2019.
Despite this decline, the price has risen significantly over the same time frame.
Not only has the RSI(14) fallen notably on the daily resolution, there is also observable negative divergence as well.
This is notably, bearish.
Balance of Power
Cryptomedication Volatility RSI
The Cryptomedication Volatility RSI(displayed above) is signaling an increase in momentum(expansion) upward as well. This, too, is worth noting.
As to whether this indicator in conjunction with the BoP(Balance of Power) outweighs the bearish news conveyed by the RSI(14) on the daily resolution is something that we won’t be able to assess until later.
Re-Evaluating the Main Chart
Its worth noting that the current period on the daily resolution is not over yet(there are still four hours left at the time of writing). Thus, the analysis above could be rendered invalid if there are any major swings in the price action between now and that time.
ZN Reversion Ribbon above on the daily resolution indicates that there may be a short-term price increase(expansion) in the near future. But overall, we can see a steep decline in the height of the ribbon over the past few periods as well, as shown below:
This trend could continue in the long run, however. So this indicator is not a reliable signal for whether the price will increase or decrease.
Zerononcense Double Guppy Channels
The indicator above also signals some major impending bearish action on the way for Bitcoin as well.
Based on all the information presented above, it seems reasonable to assume that Bitcoin could be headed on its way down in the long-term.
Again, the indicators are only slightly favoring a bearish conclusion overall, on the daily resolution. When taking all of the indicators(and other ones assessed outside of this price analysis) into account, there are numerous reasons to favor a bearish scenario over a bullish one – in the longer term.