Bitcoin was choppy after the New York closing bell on Monday, with textbook indicators pointing to further sell-off during Asian hours.
The benchmark cryptocurrency reversed directions after recording its all-time high at $24,300 on Sunday. It fell by as much as 9.82 percent on Monday, hitting an intraday low of $21,913 as traders secured their short-term profits. Later, Bitcoin rebounded to reclaim its $22,500-support level, maintaining the price floor throughout the New York trading hours.
Bitcoin wobbled between gains and losses despite a strong risk-off sentiment, led by fears about a new COVID-19 mutation in the UK that spread faster than its predecessor. The US benchmark index, the S&P 500, closed the Monday session 0.39 percent on the news. Bitcoin’s closest rival, Gold, also plunged 0.25 percent on the back of fresh upticks in the US dollar.
Bitcoin 4H Price Chart
The BTC/USD exchange rate’s fall on Monday also confirmed a bearish reversal indicated dubbed as Rising Wedge. From December 16, 2020, the pair was trending upward until Monday morning while fluctuating between two converging trendlines. It later broke below the structure.
Typically, breaking below a Rising Wedge pattern prompts the asset to fall by the maximum distance between the upper and lower trends. In Bitcoin’s case, that length is almost $2,036. Meanwhile, the point at which the cryptocurrency broke bearish on the Wedge is $23,546.
That puts the Rising Wedge target near $21,150. Bitcoin came close to achieving it during the European session, which means it still may want to head lower to test the target.
Bitcoin also slipped below its 20-period exponential moving average (the green wave). The move increased its possibility of extending the downside correction towards the 50-period simple moving average (the red wave). That currently sits near $21,727, a level that comes in the way of the Rising Wedge breakout target.
Daily Chart
On its 1D chart, Bitcoin’s downside target is near the 20-DMA wave (in green) — around $20,603.
The cryptocurrency risks getting to $20,000 because of its recent fractals. As shown in the chart above, every correction that succeeds a major price rally tends to test the 20-DMA wave. It does not specifically make Bitcoin less bullish than earlier. Instead, the correction serves as an opportunity for others to enter fresh long positions.
Bitcoin is fundamentally bullish due to the ongoing quantitative easing programs by central banks and governments around the world. The cryptocurrency rallied by more than 500 percent as the US dollar declined and fears of inflation rose.