Since Bitcoin was as low as $ 8,600 earlier this week, Bitcoin has made a strong comeback that spiked prices to $ 9,900 on June 4 and 5.
The bounce of over 10% has convinced many traders of the bull business, hence futures exchange financing remains positive as longs are more aggressive than shorts. Still, analysts are beginning to fear that the rally to $ 9,900 is just noise in a bearish medium-term trend.
Related Reading: No, Bitcoin forming a weekly TD sequence “9” does not kill the bull trend
Bitcoin is trading in a Wyckoff distribution, analysts say
Analyst Adam Li noted that Bitcoin’s recent price action from April to today resembles a schedule set by leading technical analyst Richard Wyckoff.
During his career he made a number of them schematics which he saw appearing on the charts over and over. They are divided into two types: the bullish Wyckoff Accumulations and the bearish Wyckoff Distributions.
According to Li’s analysis, Bitcoin’s price action looks like the beginning of a Wyckoff distribution. Should the pattern come out completely, the cryptocurrency will drop to $ 7,000 by September.
Li isn’t the only analyst currently suggesting that Bitcoin is trading as an asset going through a Wyckoff distribution.
A prominent pseudonymous trader shared that while there are a number of ways you can interpret the recent price action, the volume shows signs of distribution:
“In terms of volume, I can’t look beyond the distribution here given the response to the high sweep. There are very few re-accumulation ranges that we would expect to contain a movement above the margin that was so strongly rejected. Typically in a re- accumulation structure would hold this movement, not come back. That’s usually one of our first signs of spreading, “said the analyst wrote in reference to this week’s attempted (and unsuccessful) outbreak past $ 10,500.
Technical trends Corroborate Bear
Technical indicators confirm the bearish charts.
A trader told in late May that BTC’s weekly chart prints four clear signs that the asset is rolling down to the bottom. They are as follows:
- The Tom Demark Sequential, an indicator that prints “9” signals at or near key points in an asset’s trend, has just printed a “9”.
- Hidden bearish differences form between the Klinger trend indicator and the price.
- Bitcoin formed a “Heikin-Ashi toll” pattern last week, suggesting a reversal of the bull trend.
- The Stochastic Relative Strength Index (RSI), which tracks momentum, has seen a bearish cross for the first time since February.
Added to this, John Bollinger, the prominent technical analysis behind the Bollinger Bands indicator, recently wrote:
“It’s a Head Fake at the top Bollinger Band for $ btcusd, time to be careful or short.”
Related Read: Crypto Facts: $ 200 Million In Bitcoin Liquidated, Ethereum DeFi Adoption Limited, Bloomberg Is Bullish
Featured Image from Shutterstock Price tags: xbtusd, btcusd, btcusdt, Textbook Wyckoff Analysis Shows Bitcoin Is About to See a Brutal Drop to $7,000s