- Bitcoin has currently eluded double bottom confirmation on the weekly chart, but this price action has sparked discussions among analysts about the possibility of Bitcoin forming a double bottom pattern.
- Rekt Capital, a renowned crypto analyst, recently shared his views suggesting that the current price pattern of Bitcoin on the weekly chart resembles a double top, which generally indicates a bearish reversal.
- Rekt Capital also highlighted the challenges facing Bitcoin, highlighting the uncertainty around the $26,000 support level and the many overlapping resistances that could prevent the completion of the double bottom pattern.
According to the movements observed on the Bitcoin chart in recent days, the price is showing a reversal signal: Will the double bottom formed in Bitcoin trigger the rise?
Double Bottom Formation Observed on Bitcoin Chart
In recent days, Bitcoin has shown a potential reversal sign by forming three consecutive green daily candles. Such a formation was last observed in early July, and it led Bitcoin from just below $25,000 to above $31,000 from mid-June to the end of June. This change in price dynamics signaled a shift in market sentiment, slowly transitioning from a bearish outlook to a more bullish one.
Bitcoin has currently surpassed the double bottom confirmation on the weekly chart, but this price movement has sparked discussions among analysts about the possibility of Bitcoin forming a double top, which is a significant technical indicator.
The double bottom is a classic technical analysis formation that indicates a potential trend reversal from a downtrend to an uptrend in markets. This pattern is characterized by two distinct troughs or low points in the price chart, with a peak or a small high point between them. The pattern resembles the letter “W,” with the first trough representing a clear low point, followed by a temporary rise and usually a second trough near the same price level as the first one. A valid double bottom is confirmed when the price breaks above the peak or resistance level between the two troughs, signaling a potential upward trend reversal.
Rekt Capital, a renowned crypto analyst, recently shared views suggesting that Bitcoin’s current price pattern on the weekly chart resembles a double top, which typically indicates a bearish reversal. This pattern is characterized by an ‘M’ shape. However, for this to be confirmed, the price would need to drop below the $26,000 support level. As of the time of writing, Bitcoin has managed to surpass the double top confirmation, trading at $26,440.
On the other hand, the double bottom formation, forming a ‘W’ shape, would require Bitcoin to recover from the $26,000 level. Rekt Capital tweeted today, “Could this BTC Double Top actually be a Double Bottom? Yes. But for BTC to form a Double Bottom, it needs to bounce back from $26,000 and rise to $30,600 (this is the confirmation point).”
Rekt Capital also highlighted the uncertainties around the $26,000 support level and numerous overlapping resistances that could hinder the completion of the double bottom formation. Emphasizing the significance of the $26,000 level, Rekt Capital stated, “It looks like BTC may be choosing the ‘relief rally’ route to potentially flip the old support into new resistance. The Black Monthly level (~$27,200) also roughly converges with the Bull Market support band.”
Moreover, by pointing out Bitcoin’s last bearish monthly candle closing in August, Rekt Capital highlighted that Bitcoin closed below approximately $27,150, indicating that Bitcoin’s current price movement could be merely a relief rally before dropping to the $23,000 region without confirming $27,150 as a new resistance. The analyst also noted, “A recovery to ~$27,150 is possible for BTC, maybe even more upside beyond that in September. […] The next significant Monthly support is ~$23,000 since ~$27,150 has been lost.”
More Resistance Levels for BTC Price
Therefore, for Bitcoin to confirm the double bottom pattern, bulls need to surpass not only the significant resistance level at $27,150 but also other key resistance levels, with the next major one being at $30,600.
CryptoQuant, an on-chain analysis firm, often highlights the role of short-term Bitcoin holders providing liquidity in significant price movements. According to data, these holders’ profit-taking points are between $27,500 and $29,000. If Bitcoin stays below these levels for an extended period, it may incentivize these holders to sell, exerting downward pressure on the price.
In the 4-hour time frame, Bitcoin faces three main resistance levels to overcome: $26,857 (38.2% Fibonacci retracement level), $27,365 (23.6% Fibonacci retracement level), and $28,186 (Grayscale’s high level from August 29).
