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Technical analysis of Bitcoin price; Will Bitcoin price fall to $16,000?

Technical analysis of Bitcoin price;  Will Bitcoin price fall to $16,000?

Crypto Capo (Crypto Capo) is the nickname of one of the famous crypto market analysts who predicted that the price of Bitcoin will fall below $30,000 in 2022. In his latest analysis, Capo considered the chance of the short squeeze phenomenon to occur for Bitcoin.

According to Mihan Blockchain, the price of Bitcoin is close to $20,000, continuing its decline since last week. This happened after Jerome Powell’s speech at the Jackson Hole conference on Friday evening and has raised the trading volume of trading markets. About 327 million dollars were liquidated on exchanges in the last 24 hours, of which about 79% were related to long positions.

Capo in a tweet pointed out that the possibility of shorts squeezes occurring in the case of Bitcoin price There is. Short squeezes occur when traders cash out a large volume of their short trades due to rising prices, and in this case, by redeeming Bitcoin (to settle their trade), the demand to buy BTC increases and the price of the asset suddenly jumps.

Capo believes that this price area has forced many traders to take short positions, and if the price recovers to some extent and the loss limit of these positions is activated; A short closing (resulting in a BTC buyback) could push the price of the cryptocurrency up to around $22,500-$23,000, followed by a drop to the $16,000 target.

According to the figure below, this analyst has shared the Bitcoin price chart in the 4-hour time frame and believes that after the return of the price from the $25,200 area, we have seen the formation of a 5-wave Elliott pattern, and now its 5th wave is also complete.

Bitcoin price chart 4-hour time frame Source: Trading View
Bitcoin price chart 4-hour time frame Source: Trading View

According to this analysis, the short squeeze phenomenon will lead to an increase in the price up to $22,500 and finally $23,000. This price reversal can act as a pullback to the broken uptrend line (red line) and is considered a kind of bull trap that deceives traders about changing the market trend. Capo believes that from that area in the Bitcoin candlestick, we will probably see a bearish hammer pattern and the price will fall first to the level of $19,000 and then to $16,000, and from that level we will see a change in the overall market trend to an upward trend. .

This analyst believes that a similar trend happened to Bitcoin in May, when after a drop we saw the price rise to the level of $32,000, and then a deeper drop occurred, and this case was accompanied by a divergence in The RSI indicator was (left figure). Now, the RSI level in the 4-hour time frame compared to August 29, when the price was in the range of $20,900; is higher and we can clearly see the formation of upward divergence in the chart.

Bitcoin price comparison in 4-hour time frame Source: Trading View
Bitcoin price comparison in 4-hour time frame Source: Trading View

Capo also compared the Chiliz (CHZ) price chart (chart above) to the current state of Bitcoin, which has behaved similarly to the current state of Bitcoin in the period shown. That is, after going through a 5-wave downward trend, it has reached its temporary price floor, and then had a price correction to the $0.23 area, and from there experienced a deeper fall to the $0.14 area. After reaching this level, the head and shoulder pattern has reversed and the overall trend has changed in its price. He believes that the price of Bitcoin will also go through this process in accordance with the goals mentioned in the previous part.

Comparison of the price behavior of CHZ and Bitcoin Source: TradingView
Comparison chart of price behavior of CHZ and Bitcoin Source: TradingView
  • Where are the support and resistance levels of Bitcoin?

According to Capo’s analysis, Bitcoin’s support levels are located at $20,000, $19,000, and $16,000, and its resistance levels are in the range of $22,500 to $23,000.

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