U.Today: It surpassed the $70,000 barrier, a huge milestone, but not everything is so good. That being said, traders should be on the lookout for a potentially dangerous pattern developing on the chart: a double top pattern around the $71,900 mark.
What exactly is a double top pattern? Generally speaking, this pattern is interpreted as a bearish reversal signal, suggesting that the asset may find it difficult to continue rising. It develops when the price reaches a high, falls, and then rises to the high once more before beginning to fall.
The bullish momentum appears to be waning as indicated by this double peak and a downtrend may ensue. Bitcoin price attempted to rally after reaching $70,000 but encountered resistance near $71,900, as can be seen in the current chart.
The completion of the double top formation by Bitcoin could signal the end of the current rally if it fails to overcome this resistance and pulls back. This cautious outlook is supported by a number of indicators. According to the RSI, a price correction is usually preceded by overbought levels, which Bitcoin is approaching.
Additionally, volume did not increase much during the most recent bullish move, which may indicate that buying pressure is easing. However, don't forget the bigger picture. Even despite these red flags, in the past, Bitcoin has consistently shown bullish behavior and resistance, frequently defying technical analysis patterns.
Institutional interest and widespread adoption are growing and market sentiment at the moment remains largely positive, thanks to the ETF. Traders must be on guard. The double top pattern may be confirmed and a possible drop in price could occur if Bitcoin falls below the $70,000 support level.
This article was originally published on U.Today.
