Bitcoin (BTC) Rally Fades After Gold Pullback: Market Analysis

Gold suffered an 8% pullback on Tuesday and into early Wednesday, almost tagging support at $4,000. While gold was plummeting, the Bitcoin price rallied unexpectedly, managing to hit $114,000 before the price fell again, wiping out all the previous gains. What’s next for Bitcoin in this current volatile market?

Failed rally ends up with $BTC price back where it started

Source: TradingView

The unexpected spike in the $BTC price may have caught many off guard. One moment the price was bouncing gently along the $108,000 horizontal support, and the next moment it took off to the upside. In the space of an hour the price jumped $3,700, taking it above the major trendline and also the top of the channel (in blue). It then rose as far as the descending trendline from the all-time high, before sinking back to the channel top, falling back in, and ending up exactly back at the $108,000 horizontal support. All in all, the $BTC price rose a total of $5,500 (5%).

According to Coinglass, more than $652 million in value was wiped from both the longs and the shorts over a 24hr period. More than 160,000 traders were liquidated. 

It appears that the current market will just not tolerate any leverage. Market makers may have been licking their lips with glee as traders jumped onto a Bitcoin price that had drilled through resistances with ease and that was potentially heading back to the high at a rate of knots. Once again it wasn’t to be, and Bitcoin traders staggered off licking their wounds for the umpteenth time.

Bearish pattern confirms for $BTC price

Source: TradingView

It can be seen that the recent upside spike stopped at the 50-day SMA, while currently the 200-day SMA is providing support. Be that as it may, the glaring stand-out in the daily chart is a big head and shoulders pattern. Was Tuesday’s spike to the upside no more than a confirmation of this pattern? The price had already fallen through the neckline and now we have had the price return to confirm this bearish pattern. 

Head and shoulders measured move to $88,000

Source: TradingView

Zooming out one can observe the measured move for the head and shoulders pattern. It would take the $BTC price all the way down to $88,000. This matches up perfectly with strong horizontal support. Could this be Bitcoin’s next move? If it is, this could potentially be the first move down into a bear market.

Bull market parabola about to fail - one chance left

Source: TradingView

The above weekly chart is probably the most critical for the continuation of the bull market since it began back in January 2023. In the price action part of the chart things do not look good. The head and shoulders pattern has confirmed at the very worst point - right at the place where the bull market parabola can be broken. This parabola has held really well up to now, but it must be said that if the parabola fails the bull market could probably fail with it, especially if the measured move of the head and shoulders pattern plays out. 

The current Bitcoin bull market has one hope left, and that is the Stochastic RSI on the weekly time frame. By the beginning of next week the indicators should be right at the bottom. If they can tick back up quickly and signal upside momentum, the current downside move could end up being just a fakeout. It’s a long shot, and it would need to happen quickly. The fate of this bull market is now in the balance.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.