The Bitcoin (BTC) price has increased significantly over the past two weeks but has created a bearish pattern in the short-term.

Technical indicators are also showing weakness, indicating a retracement could be in the cards.

Bitcoin Double-Top Implies Weakness

In the period between Oct 28-31, the BTC price created a double-top pattern near $14,000. The double-top is normally considered a bearish reversal pattern.

The pattern has also been combined with a significant bearish divergence in both the RSI and MACD. While the former is still trading above 50, the latter has crossed into negative territory — a sign that the short-term trend is turning bearish.

The shorter-term two-hour chart shows an even more pronounced bearish divergence in both the RSI and MACD.

In addition, BTC seems to be trading inside a parallel ascending channel and is currently sitting on the midline.

Besides the divergence, movement contained inside a parallel channel is most often corrective, allowing for the possibility of a drop. If so, the closest support would be at the ascending support line of the channel near $13,200.

Wave Count

The short-term count (blue) suggests that the price has just begun the C wave, which would complete the aforementioned wave 4 (orange).

The most likely level for this wave to end would be between $12,430-$12,530, the 1.61 Fib extension of sub-wave a (blue) and the 0.382 Fib level of wave 3 (orange).

In the longer-term, another increase is expected after the completion of wave 4 which could take BTC towards $16,000.

The formation would be invalidated by a decrease below the wave 1 high at $11,093 and would be partially invalidated by a breakdown below the 2-4 line (dashed), currently near $11,300.

Conclusion

To conclude, the multiple bearish divergences and the presence of a double-top make it likely that BTC is correcting.

A breakdown from the channel would likely accelerate the rate of decrease, causing a sharp drop towards the targets outlined above.

What do you think we will see in the coming week / month? If you like this content, consider tipping the article / following me, so more people see this content and we get a nice discussion going on. 

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Until next time, stay classy crypto world!