While Bitcoin has been in a sharp downward trend in recent weeks, the technical structure in its price outlook has created cautious optimism in the market. The long-standing selling pressure had invalidated various bullish signals that had appeared before.
The technical structure pointed out by John Bollinger
In his assessment shared on Thursday, market technician John Bollinger pointed out that a double-bottom W formation was formed on the chart. Bollinger is known as the developer of the Bollinger Bands indicator, which is widely used in financial markets. According to him, this structure may be the first strong technical signal that can end the downtrend after previous unsuccessful attempts.
John Bollinger emphasizes that the structure formed on the chart points to a W formation that can end the downward trend, and that the view is “literally fractal”.
In the chart shared by Bollinger, it is seen that Bitcoin experienced consecutive harsh corrections after an attempt to rise to $ 82,000 in May, but could not be permanent. This withdrawal process extended to the lower limits of the Bollinger Bands and brought about the formation of a three-stage bottom.
Mini dictionary: Fractal describes the repetition of similar small structures within a larger structure in technical analysis. The W formation is often associated with the double bottom view and is viewed as a signal of transition from bearish to bullish under certain conditions.
Threshold monitored over a wider time period
Bollinger also hinted that the structure on the daily chart could form the second leg of a broader fractal pattern seen on the larger time frame. Therefore, he emphasized that investors should also watch the weekly chart.
If the technical outlook holds and the price climbs above the mid-top at $65,000, an end to the months-long downtrend could be on the cards. However, for this scenario to gain validity, it is important that the level in question is exceeded and the movement is permanent.
Looking at the weekly timeframe, the daily correction is considered to form the second part of a larger fractal W structure.
Price and pressure factors
Bitcoin is trading at $61,556 at the time of writing. Although the price showed a limited recovery in the last episode, it cannot be said that the pressure has completely disappeared in the broader outlook.
Ongoing outflows from spot Bitcoin exchange-traded funds and interest rate hike concerns continue to be the two main risk topics in the market. These factors may make it difficult for positive signs on the technical side to be confirmed in the short term.
