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Blast from the Past Bitcoin Fractal suggests a record reversal is near

Mark Twain said history doesn’t repeat itself, but it often rhymes. Such a scenario could soon be playing out in Bitcoin, according to a potential fractal mimicking the setup prior to an earlier record breaking rally.

While the conditions for an exact iteration aren’t exactly the same, there might be enough every now and then for the price action to rhyme just enough. Let’s take a closer look.

Record Bitcoin Price Fractal Found, But Is It Valid?

Markets are cyclical, and patterns in these markets repeat themselves so often that they can be used to predict the future. Most of the statistically proven engineering patterns contain some kind of geometric shape such as triangles and rectangles.

But not all setups are that clear. Repeating patterns called fractals can appear, mimicking the price movement of past moments. When fractals appear, they are not a perfect repetition of the previous situation, but they can give similar results.

Related reading | Could the turmoil in Kazakhstan cause another bitcoin hash crash?

The fractal in question is a setup from October 25, 2019 – formerly known as the “Xi pump” or “China pump”. Bitcoin price had passed the support after more than a month of grinding, only to sharply reverse.

The price movement was not only reversed, the resulting short squeeze and FOMO led to a record-breaking increase of 44% within 48 to 72 hours. It was the third largest one-day surge in cryptocurrency history.

Price Action mimics a fractal from October 2019 | Source: BTCUSD on TradingView.com

Will the Death Cross breathe new life into the crypto bulls?

The above fractal is eerily similar to the price movement during the October 2019 downtrend. The peaks and valleys fit together well enough, as pictured above.

What is more revealing is the fact that the same setup brews up when Bollinger Bands are turned on. 12-hour BTCUSD timeframes show a similar pattern, then a very similar close outside the lower Bollinger band. After a pause and a pair of doji, bitcoin price flipped and flipped sharply.

2022-01-06 04/14/47

The Bollinger Bands could bring BTC back to $ 60,000 | Source: BTCUSD on TradingView.com

Should the pattern repeat itself or even rhyme, there is the potential for a historic, record-breaking reversal. The last time the setup was in October 2019 there was a 44% increase in the days that followed.

Related reading | 2022: The year the secular Bitcoin Bull Run could end

Another 44% increase would bring Bitcoin back above $ 61,000 per coin, and that could happen in a few days. However, fractals are not valid, statistically proven patterns with a probability behind them. They can just look like they were past price action, but they will not produce the same results at all.

BTCUSD_2022-01-06_15-03-58

Could Bitcoin Pump Back Into The Death Cross? | Source: BTCUSD on TradingView.com

After all, there is a threatening “death cross” on the daily newspaper, which appeared at about the same time as the so-called China pump. A death cross occurs when a short-term moving average – the 50-day MA – crosses below a long-term moving average – the 200-day MA.

Despite all the similarities, the above fractal should be treated with caution – salt, which can land in bears’ wounds, should play out this pattern.

Follow @TonySpilotroBTC on Twitter or join the TonyTradesBTC Telegram for exclusive daily market insights and technical analysis training. Please Note: The content is educational and should not be viewed as investment advice.

Featured image from iStockPhoto, charts from TradingView.com

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