Bitcoin price over the 24 hours plummeted from over $12,000 to as low as $11,150 in a violent selloff. As blood runs in the streets and the crypto market turns into a sea of red, investors must decide to buy the dip or sell before things get worse.
According to a massive bearish divergence on the monthly MACD dating back more than a year, selling may be the better of the two options. If the bearish signal confirms, what might this mean for the leading cryptocurrency by market cap?Bitcoin Price Drops Nearly $1,000 In Less Than 24 Hours, Is This The Start of a Bearish Reversal?
After months of an uptrend, Bitcoin price may have started a reversal. A nearly $1,000 crash today is close to completing a head and shoulders formation, with a short-term target of $10,250.
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According to the moving average convergence divergence indicator, or MACD for short, there’s a massive bearish divergence potentially forming across 16 months of Bitcoin price action.
Monthly Moving Average Convergence Divergence (MACD) Indicator Bear Div | Source:
BTCUSD Monthly MACD Bear Div May Have Revealed Dominant Downtrend Line, Retest of Lows Ahead
Extending that bearish divergence line even further, and switching to weekly timeframes, potentially reveals the dominant downtrend line that is still keeping Bitcoin at bay.
Just like Bitcoin already broke free from a downtrend line before exploding toward $14,000, a new, dominant downtrend line was formed after the second peak. Trend lines are considered valid when they have at least three touches.
BTCUSD Weekly Symmetrical Triangle ABCDE Correction | Source:
The top trendline of the symmetrical triangle drawn with the new dominant downtrend line perfectly matches the 8-degree angle of the bottom trend line, adding to the pattern’s overall symmetry.
Related Reading | Current Bitcoin Price Action Closely Follows Textbook Distribution Pattern
If the symmetrical triangle is still active, the formation would closely resemble an ABCDE corrective triangle. Such a pattern would suggest one more higher low must be set before the crypto asset completes a real breakout of the triangle, and starts a new bull market.
