Bitcoin price might crash violently ahead of US CPI release, dragging altcoins with it

  • Bitcoin price appears to have reached a local high of $17,398 after a 4.3% rally.
  • Investors should prepare for a correction to $16,000 or below, depending on the circumstances.
  • A six-hour candle close above $17,800 will invalidate the bearish thesis for BTC.

The price of Bitcoin shows that the market is prepared for a reversal from multiple perspectives. Although BTC has rallied by only a small amount, some altcoins have more than doubled in the past week. Therefore altcoin traders should be careful this week as things could change for the worse.

Bitcoin price at a turning point

Bitcoin price shows that it has formed multiple caps in the last two months or so. Looking closely at BTC, the Stochastic and the Relative Strength Index show a clear trend and signals to identify the exhaustion of the promotions

The graph attached below shows two important observations:

  • Every time the stochastic indicator makes a bearish cross into the overbought territory, ie above 80, a correction is triggered.
  • While some countertrend rallies are strong, others are slow and of lesser magnitude. In addition to the bearish Stochastic crossover in the overbought zone, if the RSI is also in the overbought zone, ie above 70, the chances of a correction increase.

Both of the aforementioned conditions have been met twice in the past two months, where BTC has plunged 27% and 11%, respectively. With the latest market reversal signal coming on Monday night, the Bitcoin price is poised for a rapid downtrend.

BTC/USDT 6-hour chart

To identify the key levels that the Bitcoin price will visit, investors should pay attention to the chart attached below. The four-hour chart shows that BTC has filled a significant gap known as a Fair Value Gap (FVG), which runs roughly from $17,000 to $17,300.

A bearish engulfing candlestick it has already formed on the four-hour chart, with a huge hurdle present at $17,800. Therefore, a pullback from the current position will take BTC down to retest the $16,830 support level.

If the sellers continue to arrive, then Bitcoin price could revisit the $16,624 barrier, below which is the sell-stop liquidity due to the higher lows.

The ideal place for the bears to rest would be after the collection of sell stop liquidity below the equal lows formed at $15,443.

BTC/USDT 4-hour chart

BTC/USDT 4-hour chart

While the pessimistic outlook for Bitcoin’s price sounds a bit surprising, all the evidence supports it. If the buyers return, they could undo the local top formation trend that has been in place for more than two months.

This move will occur if Bitcoin price produces a four-hour candle close above $17,800. In such a case, BTC will have a chance to rerange to $18,230 and continue its uptrend to $19,237.


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