Bitcoin’s 60 Percent Rally From July Lows May Be Running Out of Steam

Bitcoin’s burst above the $50,000 level didn’t last long and chart patterns signal its rally since July is at risk of fading.

The largest cryptocurrency fell as much as 4.4 per cent Thursday to $46,588, with other tokens including Ether retreating along with the Bloomberg Galaxy Crypto Index. The drop pared Bitcoin’s rally since a July low to some 60 per cent.

John Bollinger, inventor of Bollinger bands, in a tweet suggested taking some profits or hedging. Katie Stockton at Fairlead Strategies cited DeMark market-timing indicators as flagging about two weeks of “sideways-to-lower” prices.

Two charts help sum up the current situation for Bitcoin.

Shrinking Bandwidth

Narrowing Bollinger bands indicate the Bitcoin rally is flagging and that the virtual currency faces a zone of resistance from $50,000 to $51,000. A key threshold to watch is the middle line of the Bollinger study at about $46,700.

Point and Figure

A so-called point and figure analysis -- which spotlights the direction of prices without a time dimension -- signals Bitcoin faces a challenge to scale levels around $50,940 on a closing basis. A failure to breach the 45-degree trend-line of the point and figure chart could strengthen the bearish case.

August 26, 2021