Bitcoin Risks Drop to $8.7K as Accurate Fractal Flashes Sell-off Sentiment

Bitcoin is risking massive price declines below $9,000 as a historically accurate fractal indicates traders’ sell-off sentiment.

The benchmark cryptocurrency’s tendency to retest the $8,750 level increased after it confirmed a bullish reversal pattern last week. Dubbed as Doji, the indicator is typically a session wherein an asset’s candlestick has almost the same opening and closing rate. Technical analysts treat it as a sign of trend reversal.

Bitcoin’s last week’s performance saw it open the market at $9,920 and close it near $9,965, according to data fetched by Coinbase exchange. Meanwhile, the cryptocurrency began in a negative area heading into the new week today. The entire price action appeared as a reminiscent of a similar move back in May 2019.

Prominent market analyst KongBTC noted that bitcoin’s formation of a weekly Doji candle in May 2019 resulted in a massive price decline. The full-time trader expected traders to undergo a similar sell-off sentiment as bitcoin continues to remain capped under a strict resistance area of $10,000-10,500.

“Last time [Doji] was followed by a 12.3% dump,” wrote KongBTC. “This time a 12.3% dump would bring us to a weekly key-level at $8,750.”

Weak Hands

The technical downside target looked achievable also because of a lack of bullish strength above the $10,000-level.

Traders in the past two weeks looked too afraid to enter new long positions above the said resistance. Also, the area above the five-figure valuation saw weaker trading volumes and momentum, confirming the likelihood of bitcoin registering new short-term lows.

Investment guru DonAlt said earlier today that bitcoin would likely remain under the $10,000-resistance, which means a run below $9,000 is most likely to happen sooner or later.

“Still looking good for bears in my opinion,” said DonAlt. “Given that I’m trading counter-trend, I moved my stop another step down just above $10,000. If I’m correct we won’t see $10000 again for quite a while.”

Bitcoin Bulls Still in Charge

While Doji does sound like an alarm of a diving bitcoin price, combining it with other vital patterns shows a slightly bullish picture.

Bitcoin’s Relative Strength Index (RSI), for instance, indicate that the cryptocurrency is still underbought. Meanwhile, bitcoin has broken above a crucial resistance area defined by its 50-weekly moving average. Therefore, the cryptocurrency still has room to continue the bull run that has already swelled by more than 32 percent so far into 2020.

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Key bitcoin indicators are looking bullish | Source: TradingView.com, Coinbase

That said, the current Doji formation could also be a ‘Spinning Top,’ – a candlestick pattern that signals weakness in the current trend but not reversal. Overall, it means that traders might be in a standoff so they could be gaining momentum to continue the uptrend.



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