Over the past few weeks, the leading cryptocurrency has faced an unabated rise. As of Wednesday, Bitcoin reached the $ 18,500 level, climbing again to the $ 17,000 level, the $ 20,000 correction it arrived in January 2018.
However, according to some analysts, there are some risks in the ongoing Bitcoin rally. An anonymous analyst at TradingView pointed out these downside possibilities. The analyst detailed these with three technical indicators, hinting that Bitcoin will drop to at least $ 13,868 in the coming days.
TradingView analyst spotted a potential bearish trend in the MACD indicator of the Bitcoin daily chart.
When the 12-day exponential moving average (blue) of the MACD closes below the 26-day exponential moving average (orange), a downward trend occurs. Bitcoin’s 12-DMA is currently moving north away from its 26-DMA. However, the analyst believes there will be a downward transition in the next price correction.
In 2019, the momentum oscillator reached a peak near 1044 when the Bitcoin price reached $ 13,868. However, this year has seen both the cryptocurrency and its MACD break above these upper ceilings. BTC / USD rose above $ 18,000, while the MACD indicator rose above 1044.
The analyst noted that he sees this as an overstretched scenario, which means an aggressive drawback correction. He stated that BTC / USD, which handled 2019 as the primary fractal, may fall to its all-time high, but will drop below $ 14,000 in the next sale.
2. Price-Volume Difference
The next downward factor is the increasing differentiation between Bitcoin price and daily trading volume. Many investors admit that when the ratio of an asset rises with decreasing volumes, the uptrend indicates that it is losing momentum. TradingView analyst described the same catalyst behind his negative comment:
“The volume is falling as the price goes up. This is a bearish indicator showing that trading activity is supporting higher prices at a falling rate. ”
3.Inverted Head and Shoulder Formation
Another signal proving Bitcoin’s over $ 18,000 rally is the inverted Head and Shoulder model (IH&S).
The analyst stated that the bitcoin price on November 17 reached the target of the $ 17,100 breakout of the technical model in question. He estimated that a bearish correction from the local high would lower the price to $ 13,868. However, the price rose to $ 18,500 on Wednesday.
The most recent Bitcoin was going through a sale near its highest level since the beginning of the year, with the risk of an expanded downward move towards $ 17,000. In such a case, the breakout move above $ 17,000 could be fake and confirm the analyst’s comment for 2019’s high.