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Bitcoin’s Latest Correction Could Spark a Bear Run Towards $6K, Fractal Shows

Yashu Gola by Yashu Gola
2 years ago
in Bitcoin, Technical analysis
Reading Time: 2 mins read
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  • Bitcoin extended its bearish correction at the start of this week, falling briefly below $9,000 for the first time in three weeks.
  • While cryptocurrency reclaimed the said support level, fears of new sell-off rounds are looming over its market.
  • Meanwhile, a separate fractal is also suggesting that Bitcoin would retest $6,000 in the medium-term.

Bitcoin may fall to $6,000, according to an eerily accurate fractal.

The chart pattern hints recurrence as Bitcoin extends its bearish correction from a local high above $10,000. Meanwhile, technical indicators, including two weekly moving averages and a momentum gauger indicator, the Relative Strength Indicator, also validate the fractal.

The Bitcoin Fractal Explained

So it seems, Bitcoin is extending its bearish correction after testing a long-term Descending Trendline resistance. The downside move so far has crashed the cryptocurrency by as low as 14.70 percent in the last three weeks.

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At the same time, specific patterns are emerging near the head of the ongoing downtrend. For instance, a 50-weekly moving average (the blue wave) is holding Bitcoin from extending its bearish bias. But repeatedly testing it causes a breakdown, shows Bitcoin’s history.

bitcoin, btcusd, xbtusd, btcusdt, cryptocurrency, crypto

At press time, Bitcoin is trending in the middle of the Descending Trendline (resistance) and the 50-WMA (support). As the distance between the two technical parameters contracts, it would leave Bitcoin with no choice but to attempt a breakout.

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Historically, Bitcoin’s breakout has been biased to the downside. The cryptocurrency repeatedly attempted to break the Descending Trendline but failed. In comparison, the 50-WMA stood weaker – and allowed bitcoin to test lower levels.

Meanwhile, Bitcoin’s weekly RSI confirms a breakdown. The horizontal green line in the chart above represents a makeshift support level. When the RSI moves below it, it typically leads to more substantial downside move in the price – and vice versa.

After the Breakout

Bitcoin is testing the RSI support, all around the same time it eyes 50-WMA. Breaking below them in conjugation leaves the cryptocurrency in a stretched-out bearish territory, with the next price floor lingering near the 200-week moving average.

The orange wave in the chart has behaved as a bottom on two of Bitcoin’s long-term downtrends. In 2018, the cryptocurrency rebounded by close to 330 percent after testing 200-WMA. Also, in 2020, bouncing back from the said level led the price 95 percent higher.

If the fractal plays out as it intends to, then bitcoin risks crashing towards the 200-WMA. As of now, the orange wave is right near $6,000.

At the same time, if RSI holds above the green support line, then bitcoin could attempt another breakout above the Descending Trendline support.

Tags: bitcoinbtcusdBTCUSDTcryptocryptocurrencyxbtusd
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Yashu Gola

Yashu Gola

Yashu Gola is a Mumbai-based finance journalist. He is profoundly active in the bitcoin space since 2014 – and has contributed to several cryptocurrency media outlets, including NewsBTC, FxDailyReport, Bitcoinist, and CCN. Academically, Yashu holds a bachelor's in information technology, with majors in data structures and C++ programming language. He has also won the 'Atulya Award' for his efforts towards raising $100,000 for an India-based farming project.

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