Two Key Trends Show That Bitcoin Will Correct After $1k Rally

Two Key Trends Show That Bitcoin Will Correct After $1k Rally

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  • Bitcoin has dropped slightly since establishing highs of $11,730 on Monday.
  • The leading cryptocurrency currently trades for just over $11,400.
  • Bitcoin is expected to see some volatility as announcements are expected from China about blockchain or its digital currency.
  • From a technical standpoint, BTC is expected to retrace in the coming days as the bullish uptrend exhausts.
  • One analyst outlined two core reasons why the cryptocurrency could drop towards the low-$11,000s in the days ahead.
  • While there is this risk, fundamental trends with the U.S. dollar suggest Bitcoin should keep a bid in the coming weeks.
  • Whether or not this will be enough to stop a short-term drop, though, remains to be seen.

Bitcoin Could Correct After Moving $1,000 Higher: Key Technicals

75% of CME Bitcoin futures gaps close within the week that they open. This suggests that there is a decent likelihood Bitcoin retests the ,100 in the coming days, prior to the Friday futures close.
Bitcoin has undergone a strong rally over the past week, gaining over ,000 from last week’s lows to this week’s highs. Even after a slight drop, the cryptocurrency is still up by nearly 10% in the past seven days.
Goldman Sachs recently said that the U.S. dollar could drop as the odds of former vice president Biden increase, as another stimulus bill nears, and as a vaccine is well in the works. Chart of BTC’s price action since the end of August with analysis by crypto trader CryptoHamster (@Cryptohamsterio on Twitter).
Source: BTCUSD from TradingView.com

A dropping U.S. dollar could stop a Bitcoin decline from current levels.
Bitcoin stands to benefit from this as the cryptocurrency has rallied over recent months when the U.S. dollar has fallen. It follows a similar path and narrative to that of gold.

Dropping Dollar Could Stop BTC Decline

Because BTC exhibited volatility on the weekend, a 0 gap between futures trading on Friday and the Sunday evening open has formed.
Photo by Simon Schwyter on Unsplash
Price tags: xbtusd, btcusd, btcusdt
Charts from TradingView.com
Two Key Trends Show That Bitcoin Will Correct After k Rally

While this is a stark reversal from the market “chop” that BTC was stuck in for five weeks, more consolidation is expected.
One crypto-asset trader recently shared the chart below, noting that there is a confluence of trends indicating a pullback is to be expected. The chart shows that Bitcoin has formed a Tom Demark Sequential “Sell 9” candle just recently, suggesting an imminent bearish reversal. The same trader added that the crypto-asset has formed key bearish divergences on its four-hour chart between price action and the RSI and MACD.

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