BTC/USD: Breaking 12K? Not So Fast - MUST SEE Fractal (Aug. 10)

X Force Global Analysis:

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Fractal Analysis


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Bitcoin has been making a decent comeback to the upside. Are we looking a potential double bottom form, and looking for more potential upside, or, a double pattern top and more downside? Many still believe the current triangle pattern formation is going to play out and break to the upside, however, our bearish evidence is currently racked up with more sentiment to the downside than bullish . We do not want to take out the potential factor of the bullish factor, however, because a break of 12k would be severely bullish . Furthermore, we just don't want to all investors/traders to be blindsided by the current market sentiment. We want to make sure that we understand both sides of the spectrum. With that being said, let's get on to our two main technical factors:

1. We found an interesting fractal from MAY 2020 (this year) that looks oddly similar to the price action we are currently seeing, that may be foreshadowing potential more downside action. By how much? it depends on current support at 11K and 10.5K regions. A break of these two would be bad news on all levels for Bitcoin , and a recovery would be difficult with such volume .

2. We are currently seeing the final straw of a double top pattern that is absolutely crucial to Bitcoin's overall bullish move. Remember, we are currently up ~200% from the bottom of 2020.

Market Sentiment + What We Believe:

The market is currently very bullish in terms of overall price action and may see more potential upside according to sentiment alone. But due to the fact that volume may be hindering off, along with a double top formation now finally printed, we may see a big downfall via manipulation and panic selling. We believe this is a NO TRADE ZONE until CONFIRMATION is printed on the charts.


Let us know what you think in the comment section below!

Thank you,
X Force Global

Trade active:

Bitcoin is currently printing the possible double top and bears are looking like they want to take control.

We are cautiously bullish and now neutrally bearish. This fractal seems to be playing out as of currently. Updates will be continued as further data is given.

Comment:

A different perspective of the same fractal from May suggests a different, more bullish scenario.

Above, we can see the similarities between Bitcoin's price movement In May 2019 and today.

- The chart forms a bearish divergence, with higher highs on the price, and lower highs on the RSI
- While the divergence plays out (as marked by the candle emphasized by the white zone), the bearish engulfing candle leaves a huge downwards wick
- This indicates that support levels have been secured by bulls as they saw it as an opportunity to buy the dip
- A phase of accumulation takes place as the Stochastic Oscillator forms higher lows
- While prices accumulate before a breakout, the MACD forms a golden cross
- Prices break out of resistance, now turned support, which is tested one final time before another breakout leading to a greater rally
- What's most interesting about this fractal is that technical indicators demonstrate an almost identical structure
- The Ichimoku Cloud acts as strong support for consolidation phases, leading prices to break out once the cloud support is tested
- The 20, 60, and 100 Simple Moving Averages (SMAs) also show a very similar pattern.

Bears would have to show a break and close below 11.4k levels for further confirmation of a potential corrective trend. Bulls, on the other hand, have to show a solid break and close above 12k in order for the rally to continue upwards.

Should this fractal play out, it's highly likely that we don't see the CME gap at 9k regions fill for a very long time, if not, at all.

Comment:

In this update, we dissect the fractal update, looking at the next probable move.

The fractal has been playing out as anticipated, with a few minor differences:
- The degree of breakouts are not as strong as compared to the movements in May
- Support levels are different for this current setup

Judging by the current setup, we anticipate a break down of the current structure, and a move down from the bearish ascending wedge as marked by the red zone.

Based on our initial fractals, we should drop to re-test 10.5k support levels, see a short phase of accumulation before moving back up.

Comment:

Zooming out on the weekly, we can find similar fractals.

During the May uptrend, Bitcoin was in an extremely bullish trend, forming bullish engulfing candles, until the weekly closed as a doji candle. The following week, we saw a correction take place, in the form of a bearish engulfing candle, only to break out and continue the bullish rally.

We are seeing a very similar pattern this time, in which we break out of consolidation, form a series of bullish candles before Bitcoin showing signs of having topped out through a doji candle.

For further in-depth analysis on the weekly chart, you can reference our previous analysis below: