Not only has this Bitcoin dip back to the top of its bull flag closed the CME gap at $119,000, it has also retested support at $118,000. Could this dip take the price back into the bull flag (fakeout), or will this just be a normal retest before $BTC heads back towards its all-time high?
Doubts creeping in for the bulls?
Source: TradingView
When $BTC broke out of its bull flag and surged to just over $122,000 it really did look as though this was going to be the beginning of the next leg higher. Of course, it still may be. There is the possibility that the price has just come back to close the CME gap at $119,000 and test the support at $118,000 before returning to head higher.
That said, a few little doubts for the bulls are perhaps creeping in. The price has so far remained around the $119,000 support. Could there be another dip to retest the top of the bull flag? Or in the worst case scenario could the price even reenter the flag and confirm a fakeout?
The RSI at the bottom of the chart reveals that the indicator line has crossed down below the uptrend. This is a low time frame, so perhaps too much shouldn’t be drawn into it. However, this trendline did start at the lowest point of the price rally back into the bull flag, and this strong dip below the uptrend of the indicator line looks to be signalling that this particular rally could be over.
The Stochastic RSI indicators on this time frame are practically at the bottom, although the 8-hour and 12-hour Stochastic RSIs still require a lot more time to reset.
Bearish daily candle for Monday
Source: TradingView
With one exception, the picture on the daily time frame looks more positive for the bulls. The one exception is the quite negative looking candle for Monday. The strong surge to the upside, followed by the dip back down to support, left a lengthy candle wick behind, which as things stand is revealing a bearish double top pattern.
In favour of the bulls, the dip back down tested the support band, which also coincides with the top of the bull flag. There is a small ascending trendline which is so far holding. If the price bounces from here, this will have been a standard test and confirmation of the breakout.
At the bottom of the chart, the RSI indicator line will need to be watched closely. There is the possibility that a retest of the descending trendline plus the 50.00 level could take place.
$119,000 is major level for rally or breakdown
Source: TradingView
For the weekly chart view it is still very early to be making any strong assumptions. This said, the $119,000 level can be seen to be the major level for whether this current breakout rally continues, or whether a breakdown back into the bull flag and perhaps an even more bearish scenario plays out.
As already mentioned, a confirmation of the bull flag breakout is absolutely fine. The fact that the surge out of the flag was so strong just means that the price has further to come down in order to make this confirmation.
At the bottom of the chart the indicators in the Stochastic RSI are making their way down. They may have gone too far down now for a bounce from the 80.00 level, therefore, the next chance for the bulls is at the 50.00 level. If no bounce comes there, these indicators could carry on down to the bottom. If they do, price action is also likely to fall. It would just be a case of how far would it fall before the Stochastic RSI indicators were able to reset and head back up.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
