In the world of cryptocurrencies, Bitcoin’s (BTC) upward momentum has shown a significant decline for the past two weeks or so. This development led to a bearish signal on the weekly and an uncertain outlook on the monthly. As a result, BTC might not be clear of potential sell-offs.
The weekly analysis of Bitcoin’s performance reveals a concerning development: the emergence of a bearish Swing Failure Pattern (SFP) confirmed on March 17. This pattern, occurring within an uptrend, occurs when attempts to breach a significant resistance level fall short of sustaining momentum. Such occurrences often herald a shift in market sentiment from bullish to bearish.
Despite Bitcoin’s recent push above its previous all-time high (ATH) of $69,138, the failure to maintain momentum led to a bearish closure below this critical level, thereby solidifying the bearish SFP.
Bitcion Weekly Chart: Publish on Tradingview
The implications of this sell signal are multifaceted:
1. Profit-taking and Bull Exhaustion: The SFP suggests that early investors may be seizing profits following the unsuccessful ATH sweep. This profit-taking could trigger a temporary pullback into a trading range before the uptrend resumes.
2. Bearish Reversal: In a more pessimistic scenario, the SFP might signal the initiation of a trend reversal. This could indicate that the preceding strength was merely a bull trap, enticing buyers before a substantial decline, reminiscent of the bear market observed in October 2021.
Source: https://www.dailyfx.com/