It’s going to get worse before it gets better.
[/word_balloon]It’s possible that the 2 month Bitcoin rollercoaster ride was caused by Russian oligarchs pumping and dumping to get out of the Russian Ruble – and that doesn’t exactly spell confidence for big investors and retailers looking for some trend reversal from the bear market that’s plagued crypto over the last 5 months. So where are we headed? What’s likely to happen based on market signals and indicators? Let’s dive into the charts and find out.
The Big Picture
From a macro perspective, Bitcoin hasn’t quite finished its bear dip to show us an oversold RSI ready for a trend reversal. Couple that with the bear flag we’re seeing in development over the last two months and we’re looking at a recipe for another major dip.
The chart above shows a history of bear flag formations and price drops following shortly after. These structures are usually formed by an upward price formation slowly getting squeezed until failure. Although not as pronounced as previous macro bear flags, the last 2 months has shown us resistance and support trendlines in the general directions of a bear flag – that is, higher-highs and higher-lows tightening price action.
Zooming In
Let’s take a look at the lower time frames in the chart above. If we believe that Bitcoin isn’t quite oversold yet and a pennant is forming, we can assume that the price action will continue to squeeze until we see a breakdown in price and lower Fib Retracement levels are tested. Given this scenario, $33k may not be the local low and we may test $28k again (support from June 2021) before bouncing up. This price action would tie in well with the Weekly RSI to get us the oversold level we’re looking for to trigger a bounce back up into a bull run.
Recap
The current state of Bitcoin and its most recent price action is going to throw investors in a panic – and panic is easy to stir in an already volatile market. These sentiments (fear, uncertainty, and doubt) are usually the signals whales are looking for to buy.
Short-term we’re looking at more volatility, but once Bitcoin hits its low (which could be lower than the June 2021 low), we can probably assume a huge bull market is due after it completes its double bottom. There’s the infamous chart showing the S&P 500 making a double bottom and then surging up, insinuating similarities between the index and Bitcoin.
The next two or three months are going to be interesting