Three Bitcoin Trading Patterns Suggest That The Price Recovery To $24K Was A "Fakeout"

Three Bitcoin Trading Patterns Suggest That The Price Recovery To $24K Was A "Fakeout"

The price of BTC soared above a significant cluster of resistance, but the market structure and technical analysis indicate that the advance is merely another trap

 

The price of Bitcoin (BTC) increased toward $24,200 on July 28 following a nearly 10.5 percent rise that started the previous day.

 

Also Read: Tesla Gained $64m On Bitcoin Sales In The Second Quarter

 

Gains were seen when Federal Reserve Chairman Jerome Powell made it known that the Fed intended to halt its current tightening cycle.

 

This led several Bitcoin analysts to forecast a short-term bullish continuation; one such analyst, under by the alias Crypto Hamster, predicted that BTC will reach $26,000 next.

 

Also Read: How To Unlock A Restricted Coinbase Account?

 

However, BTC is likelihood of fully waking up from its current negative slumber seems low for at least three important reasons.

 

Previous attempts at deceiving bitcoin bulls

 

In November 2022, Bitcoin reached a record high of $69,000.

 

Also Read: A Detailed Guide To The Coinbase Account Recovery

 

Since then, the Cryptocurrency has lost more than 60% of its value while experiencing multiple mini-pump-ups along the road.

 

Since November 2021, Bitcoin has recovered at least five times on the daily chart, achieving gains of between 23 and 40 percent each time.

 

But every time it formed a local price top around its Exponential Moving Averages (EMA) and subsequently dropped to new yearly lows, it extended its correction.

 

This instance appears to be the same, with Bitcoin experiencing a bullish rejection in June and then recovering by about 17% a month later.

 

Notably, the 50-day EMA (the red wave) of the BTC price serves as temporary resistance at roughly $23,150, with a breakout clearing the road toward $27,000, which corresponds with the 100-day EMA (black). Even at $27,000, the price would be a lower high than the prior regional highs.

 

 

Technically speaking, that increases the likelihood of another bearish continuation move.

 

Low buying volume and high selling volume

 

It is interesting to note that volume activity during the current Bitcoin drop indicates a stronger desire to sell the coin at regional peaks.

 

This is demonstrated in the daily chart below emphasizing the volume readings during uptrends and downtrends from November 2021.

 

For instance, the most recent two significant price drops in May and June were accompanied by a strong rise in selling volumes.

 

In contrast, the subsequent price reductions that followed were accompanied by modest to reduced trade volumes.

 

Also Read: Binance Fined $3.4 Million By Dutch Central Bank

 

The volume continues to behave in the same way, increasing during the downturn and falling as the price rises.

 

This signals that the upward impetus is waning, which could trigger another market fall.

 

BTC to stock market correlation changes back to favor

 

Despite momentarily divorcing from stock market patterns in the beginning of July, Bitcoin is now following them once more.

 

The daily correlation coefficient, for instance, between Bitcoin and the tech-heavy Nasdaq Composite was close to 0.66 on July 28.

 

That includes decreases in both markets following the U.S. GDP is second straight quarter of fall.

 

As a result, it is now official that the United States has entered a "technical recession," which can have an adverse effect on the stock market.

 

Therefore, if Bitcoin is the positive link with the stock market persists, its negative prospects seem significant.

 

The author is thoughts and opinions alone, not necessarily those of Cointelegraph.com, are conveyed in this article.

 

Every investment and trading action carries risk, therefore before making a choice, you should do your own study.