Early this week, analysts were expecting for Bitcoin to start to reverse lower. The cryptocurrency, after rallying for five weeks straight, was seemingly starting to top out, falling to $6,800 in a move that liquidated dozens of millions.
But just days later, BTC pumped higher, liquidating $70 million worth of short positions on BitMEX due to cascading stop losses. This move brought Bitcoin to $7,800 and convinced analysts across the board that more upside is imminent.
Bears, however, may win in the end, with a crypto analyst noting that the cryptocurrency has just registered a “perfect” sell setup on a medium-term chart, suggesting an imminent reversal to the downside.
Bitcoin Price Signal May Predict An Imminent Reversal
According to crypto trader “Moe,” the four-day chart of Bitcoin and Ethereum have just printed a harrowing sign as of April 26th: the Tom Demark Sequential — a time-based indicator that prints “9” candles near or at trend reversals — is forming a “9” candle on the current candle.
This means that should the two cryptocurrencies close anywhere around the low to high-$7,000s, a “9” candle will be confirmed on the current four-day candle for BTC and ETH.
Not only would this be a textbook sell signal, but a four-day “9” candle is also what predicted Bitcoin’s previous medium-term high in February at $1o,500. As Moe fittingly put it, it’s a “perfect sell setup.”
Adding to this, another crypto trader identified that there exists a massive confluence of resistance above Bitcoin’s current price. He specifically pointed to the $7,900-8,100 zone as “very interesting,” drawing attention to the cluster of key technical levels in this region, suggesting it is a place at which bulls are likely to struggle.
Key levels at that zone include but are not limited to: the 200-day exponential moving average and simple moving average, the 21-week exponential moving average, an order book resistance, the 61.8% Fibonacci Retracement, the top of a descending triangle, and the volume-weighted average price.
It’s a confluence that adds to the “perfect sell setup” Moe mentioned.
There is a Building Bullish Confluence Though
Bulls seem to have a rapidly building case for upside though.
For one, an analyst found that whenever Bitcoin posts six weekly candles of gains in a row as it is about to do, the candle that follows has been green 75% of the time. This would suggest that bulls still have momentum to take the cryptocurrency higher.
Furthermore, as reported by NewsBTC previously, Nunya Bizniz, a Bitcoin chartist, observed that BTC’s recent price action has printed a textbook “BARR bottom.” It’s the same formation that marked the bottom in late-2018.
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