Bitcoin (BTC) surged to a three-month high during the first trading session in Asia on October 23, igniting hopes of a substantial rally among investors.
Technical indicators point to a trend reversal
In his analysis, Martinez said BTC appears to be facing an “impending price correction,” following the latest rally unless it can print a daily candlestick close above $31,560.
As can be observed from the chart below, Bitcoin’s price may be forming the head and shoulders pattern, which is considered a reliable indicator of a trend reversal, usually from bullish (upward) to bearish (downward) or vice versa.
Given that Bitcoin is currently in an uptrend, a bearish reversal may be on the horizon.
Moreover, Martinez highlighted the RSI level at 74.21, which has consistently acted as a trigger for sharp corrections since March. In the wake of the recent rally, Bitcoin has once again reached this 74.21 RSI level, intensifying the indications of a potential price correction.
Further reinforcing the prospects of a correction is the TD Sequential indicator, which is hinting “at a possible sell signal” that may emerge on October 23, said the expert.
In a separate tweet, he said the looming correction could push BTC as low as $28,630.
Bitcoin price analysis
At the time of publication, BTC was changing hands at $30,622, up 2.6% in the past 24 hours.
The maiden cryptocurrency rose more than 8% over the past week and over 15% on the month, adding around $80 billion in market cap during this period.
The new upturn appears to be driven by growing speculations that the long-awaited spot Bitcoin exchange-traded fund (ETF) may be approved by year-end. These rumors brought a fresh wave of optimism among cryptocurrency investors as such approval would bring more institutional players into the crypto space and act as a significant price catalyst.
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