A widely followed crypto analyst is warning traders that Bitcoin’s (BTC) downtrend is not over after showing a bearish signal.
Crypto trader Ali Martinez tells According to its 30,900 followers on social media platform X, the king crypto appears to be forming a classic bearish flag pattern.
Bearish flag patterns are used in technical analysis to predict abrupt downward moves. They are formed when the price consolidates after a strong downtrend but fails to break a key support level.
“Bitcoin appears to be forming a bear flag – a classic chart pattern that often signals a continuation of BTC’s downtrend.
The silver lining? A tight stop loss of just 0.86% with a potential take profit of almost 5%.”
The trader’s chart indicates that the flag pattern will materialize if Bitcoin fails to clear the support around the $28,034 level, sending it down to $26,751.
The trader too say that a Bitcoin dip is further supported by the major crypto assets by the Relative Strength Index (RSI) of market capitalization, a widely used momentum indicator that aims to determine whether an asset is overbought or oversold.
“Note that every time the RSI on BTC’s four-hour chart reaches or exceeds 74.21, BTC tends to reverse. The RSI on the four-hour chart recently reached 82.83!”
The RSI indicator scales from 0 to 100. A reading below 30 is generally considered bullish, while a reading above 70 is typically considered a bearish sign.
Bitcoin is trading at $27,568 at the time of writing, up 0.6% in the past 24 hours.
The trader too weighs in on Ethereum (ETH), saying the second-largest crypto asset by market cap is paving the way for a bullish reversal based on the market value to realized value (MVRV) indicator.
“The Ethereum market cycles transition from bearish to bullish when the MVRV (blue line) breaks strongly above the MVRV 180-day SMA (red line). Currently, ETH is still in a distribution phase, awaiting heavy accumulation!”
The MVRV compares an asset’s total market capitalization to its realized value and can be used to time the tops and bottoms of the market.
ETH is trading at $1,618 at the time of writing.
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Featured image: Shutterstock/NextMarsMedia