A key price pattern has emerged on the Bitcoin (BTC) price chart, indicating a possible impending decline.
The cryptocurrency has risen from $60,000 to new record highs above $70,000 in less than two weeks. The increase has taken the form of a “rising wedge,” which, according to technical analysis theory, is a bearish pattern.
“Typically, rising wedges develop bearish,” crypto analyst and trader Josh Olszewicz told CoinDesk, explaining the possibility of a typical bull market decline ahead.
A rising wedge pattern consists of upward sloping trend lines that connect highs and lows and converge to a single point called the apex. The convergence of the trend lines suggests a steady weakening of the bullish momentum. Thus, an eventual wedge break or move below the trend line connecting the lows represents a bearish development, paving the way for deeper price losses.
Other indicators such as the 10-day rate of change, which measures how quickly prices rise or fall within 10 days, have decoupled from rising prices.
The divergence indicates that downward momentum is building and often portends price declines. Declines of 20% or more were common during the 2017 and 2020-21 bull markets.
However, Olszewicz believes that the decline will be short-lived. “Given the incoming ETF inflows and the fact that MicroStrategy’s Saylor continues to buy more, I think it will be difficult for bears to keep them under pressure for long, even if prices decline following a potential wedge breakdown.” , explained Olszewicz.
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