(Bloomberg) —
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 4.9% Thursday to $46,322, with other tokens including Ether retreating along with the Bloomberg Galaxy Crypto Index. The drop pared Bitcoin’s rally from a July 20 low to about 60%.
Bitcoin was trading at $47,342 as of 10:10 a.m. in New York.
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.
Read More: Crypto Rally May Be Near Exhaustion, DeMark Indicators Suggest
Two charts help sum up the current situation for Bitcoin.
Shrinking Bandwidth
Narrowing Bollinger bands — a popular technical indicator that highlights volatility — — 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.
More stories like this are available on bloomberg.com
©2021 Bloomberg L.P.
