As Bitcoin continues its meteoric rise, chart analysts are warning of a worrying pattern emerging on the cryptocurrency's price chart.
Bitcoin's 'Rising Wedge' Points to Potential Pullback, Analysts Warn
According to experts, Bitcoin's rise to new record highs above $70,000 in less than two weeks has taken the shape of a “rising wedge”, a bearish signal that could herald a significant pullback in the near future.
Josh Olszewicz, a leading crypto analyst and investor, warned that a rising wedge formation typically precedes a decline in prices.
Olszewicz emphasized the importance of this pattern, suggesting that it could indicate a typical correction in the middle of a bullish market.
“Normally, rising wedges resolve the downtrend,” Olszewicz said, underlining the potential effects of this technical formation.
The rising wedge pattern is characterized by upward sloping trend lines that connect successive highs and lows, eventually converging towards a single point known as the top.
This convergence indicates a gradual weakening of bullish momentum and usually results in a break below the lower trend line. Such a breakout would typically trigger a bearish phase, causing prices to fall further.
In addition to the rising wedge formation, analysts also point to other technical indicators that point to a potential decline in Bitcoin price.
The 10-day rate of change, which measures the speed of price movements over a 10-day period, differs from rising prices, indicating a loss of upward momentum.
This divergence is often seen as a harbinger of price pullbacks, and historical data shows that significant corrections of 20% or more have occurred in previous bull markets, such as in 2017 and 2020-2021.
*This is not investment advice.
