The fractal seen on the weekly Bitcoin chart shows that a drop to $ 16,000 is possible.

The drop in the price of Bitcoin (BTC) from $ 47,358 to $ 43,178 last week raised concerns that the sale could continue.

Independent Market Analyst Nunya BiznizHe discovered a bearish fractal on Bitcoin’s weekly chart that points to its 21-week exponential moving average.

The largest cryptocurrency has closed the week below the mentioned support level 18 times so far and has continued to rise only four times. These four bullish periods are indicated by the dotted lines on the chart below.

BTC / USD daily price chart showing the 21-week EMA. Source: Nunya Bizniz, TradingView.com

Closing below the 21-week EMA has caused Bitcoin to excessively depreciate at other times, except in the case of a temporary bull market in August 2015.

Bitcoin closed the week below the mentioned level in May 2021, and its price fell below $ 30 thousand for the first time since January 2021. However, investors bought around $ 30,000, which made the price to rise above $ 50,000 again.

Still, Bitcoin’s slide below the 21-week EMA resulted in a 78 percent correction.

Bitcoin price is below the 21-week EMA again

Bitcoin closed the week ending September 26 at $ 43,178, down from the 21-week EMA, which was around $ 43,502 on the weekend for the 19th time in its history.

Although this fractal indicates that the decline will continue, the relationship between the 21-week EMA and the 50-week Simple Moving Average (SMA) shows that the decline is not certain.

Traders react immediately to these two moving averages, especially when the 20-week EMA is below the 50-week SMA. This pattern, called the Death Cross, previously symbolized the beginning of bear markets.

Weekly price chart showing Bitcoin’s death cross. Source: TradingView.com

BTC / USD closed for the week below the 21-week EMA ($ 8,041) on January 29, 2018, but then continued to rise until the green wave closed below the blue wave. Later, the pair bottomed out at the 200-week SMA ($ 3,187).

There was also a death cross just before the coronavirus hit in March 2020. Bitcoin again bottomed out near its 200-week SMA ($ 5,512) and broke records in the following months.

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Therefore, a possible death cross on the Bitcoin chart can bring the coin back to its 200-week SMA, which is currently around $ 16,000.

On the other hand, Fibonacci retracement levels around $ 34,712 and $ 27,580 could prevent Bitcoin from falling to $ 16,000.

The opinions and views expressed here are solely those of the author and do not necessarily reflect those of Cointelegraph. Every investment carries risk. Do your own research before making a decision.

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