After bitcoin was rejected from the $25,000 level, and altcoins (Total3) reentered the downwards sloping channel, how far can the crypto market fall?
With the news full of FUD for crypto it looks like the entire sector is making its way down to lower levels. However, unless another very black swan arrives, this correction would appear to be quite healthy and organic.
Pattern is bearish
Since the rejection at $25,000, bitcoin has been making its way down, and except for the odd day of green, the red candles are far more numerous. Of course, bitcoin isn’t going to go down like a lead weight. There will be ups and downs as usual.
Looking at a higher time frame of the weekly, bitcoin does appear to have formed an M pattern. The rabbit’s ears are quite distinct, although with the right ear a fair bit higher than the left. This is a bearish chart pattern, and the measured move, if it played out, would take bitcoin down to around $18,700.
A bounce to come
This would be below the 61.8 fibonacci and right in the golden pocket between that and the 71.8 fibonacci. Depending on how long it takes bitcoin to get down there, it could also end up retesting the downwards sloping trendline, which could also help it to bounce.
Another positive that could come into play in the next few weeks, is a reset of the weekly stochastic RSI momentum indicator. If bitcoin came down reasonably quickly this indicator could reset in the next 3 weeks or so, and then provide the upwards momentum to send bitcoin higher again.
Across the rest of the cryptocurrencies, the story is pretty similar as regards the weekly RSIs. Most are at the top, and many have started to dip and some are on the verge of breaking back through the 80 mark, which signals downward momentum.
A healthier price structure
Many will be very fearful of this correction, especially if and when it brings bitcoin below $20,000. However, a revisit down to the lows will help bitcoin to form that all-important price structure that could make the next move up that much healthier.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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