As part of the DP Alert, we cover Bitcoin and the Dollar every market day. We have been watching some bearish indications on both Bitcoin and the Dollar with the double top chart patterns.
On Bitcoin, price has been moving mostly sideways above support at 90,000. This happens to be the confirmation line of the double top formation. The chart pattern calls for a decline the height of the pattern. This would give us a minimum downside target at about 75,000. The PMO is now in negative territory, but we do see that Stochastics have turned up. Support could hold here and price could continue to meander sideways, but with this pattern it is highly vulnerable.
On the weekly chart we see a parabolic advance followed by high level consolidation that formed a bull flag. After the last rally powered price up, we aren’t seeing high level consolidation, it instead looks like a topping formation with the double top very visible. The weekly PMO is nearing a Crossover SELL Signal which doesn’t bode well.
The Dollar also has a bearish double top visible on the daily and weekly charts. It looked pretty good for the Dollar coming out of a bullish flag formation, but the rally stalled and set up the second top. Technically the confirmation line (middle of the “M”) has been broken with Friday’s action. The RSI is negative and the PMO is in decline. Unlike Bitcoin, Stochastics are moving lower suggesting we will see more downside out of the Dollar. That would be good for Gold which is already enjoying a strong rally. The minimum downside target of the pattern would be around 28.25.
We had an especially bullish breakout from a bearish rising wedge, but now we have that double top. The weekly PMO has turned down and price looks as if it will be back within the wedge soon.
Conclusion: We have bearish double tops on Bitcoin and the Dollar. Bitcoin has an opportunity to avoid the breakdown given rising Stochastics, but the Dollar seems destined to continue to make its way lower with dropping Stochastics. Downside targets are 75,000 for Bitcoin and 28.25 for the Dollar.
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