Bitcoin has been on a parabolic bullish rally for quite a while, which was followed by sideways movement of the price. However, at press time, the pattern formed indicated an imminent correction.
At press time, Bitcoin was priced just below $8,000, i.e., $7,979 and had a market cap of $141 billion. The dominance of Bitcoin had reduced as the rally ceased and stood at 57%.
Descending Triangle Pattern
As seen in the chart above, Bitcoin’s prices are enclosed in a continuation pattern, i.e., a descending triangle, which is a bearish pattern for Bitcoin. The volume for the same can also be seen decreasing over the course of the pattern, which affirms the above pattern.
When the pattern unfolds, the price will break out of the pattern and head downward; the only thing stopping the price from dipping is important resistance points. The price is likely to hit $7,820 level after the breakout, however, if the former level fails there are subsequent resistance points at $7,674, $7,529, and $7,256, which will be tested in that particular order.
A possible Double Top in the formation?
The above breakout is a short-term movement of price, however, on a longer time frame, the price is stuck in limbo, which explains the sideways movement. The parabolic rally was quick which is why most prominent traders, including Peter Brandt, Tone Vays, and others, are expecting a correction, that is overdue.
In the above chart, the way the price of BTC is moving suggests the possibility of the formation of a double top. However, the pattern is only confirmed after the price breaks the lowest resistance, i.e., $7,529. After which, the price will decline quickly into a correction that is being expected by most of the traders in the crypto space.