Bitcoin “Double Top” Narrative Builds, Factors To Potentially Fear

Tony "The Bull" Severino

4 years ago

3 mins read

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Bitcoin price is in a precarious location. The asset set a new all-time high just days ago but is trading below the record and starting to decline. The shifting momentum is now presenting in technical indicators supplying bearish signals, adding to the double top narrative that’s been building since failing to break $20,000.

Here are the factors to potentially fear that could point to a sharp correction in the first-ever cryptocurrency and why they are so critical.

Trend-Focused Technical Tools Suggest Crypto At Tipping Point, Correction Imminent

Bitcoin has had an incredible year, capping it off with a new all-time high set. But the expectations that once the cryptocurrency got here it would blast right on through and the new bull market would begin, are turning into a realization that the resistance level could prove too strong a second time – new record or not.

From just under $20,000 the cryptocurrency has pulled back by $1000 so far. But it was enough to cause nearly every technical indicator to begin to turn bearish, forewarning of an impending collapse.

However, the price action judging by daily candles is incredibly mixed, making it difficult to tell if the tides are turning in favor of bears temporarily, or if bulls are still in full control and just feigning weakness.

Daily Renko potential double top according to ATR, Fisher Transform confirms trend change | Source: BTCUSD on TradingView.com

Seeing Both Sides Of The Coin: Is A Double Top In Bitcoin Possible?

Certain tools and charting methods have been developed to clear out that noise that makes seeing when trends come to an end that much more difficult. Aside from traditional Japanese candlesticks and line charts, analysts also rely on Kagi, Renko, or Point and Figure type charts.

While the candles you typically see on price charts focused on each trading session’s open, high, low, and close, Renko only includes the open and close of each, ignoring the highs and lows caused by meaningless intraday volatility.

These Renko charts are potentially signaling that Bitcoin has formed a double top based on the ATR or average true range. Coinciding with the bearish “brick” formation, the Smoothed Fisher Transform has also flipped bearish at a +2.22 standard deviation.

The Fisher Transform is a technical indicator based on probabilities, with the higher the standard deviation, the lower the chances are for prices to increase or decrease.

At a zero standard deviation, probabilities are split 50-50

Essentially, with an over +2 standard deviation, the chances the cryptocurrency goes much higher in this current rally are low. However, just because the asset is showing signs of a double top, doesn’t necessarily mean it will confirm.

As other traders have pointed out, for a double-top to be confirmed as valid, it must break down through the swing low between each top – nestled at $3,200. The scenario isn’t impossible, but like what has been discussed about probabilities prior, is highly unlikely at this point.

Featured image from Deposit Photos, Charts from TradingView.com

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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