Double bottom formation on Bitcoin chart signals 50% rally

Bitcoin (BTC) price may rise more than 50 percent in September, which was bad for the cryptocurrency market, according to historical data.

Double bottom formation on BTC chart

The potential double bottom formation seen on the long-term chart of the BTC/USD pair signals an upward movement. Double bottom formations are formations that resemble the letter W and result in an uptrend.

Double bottom formation on Bitcoin chart signals 50% rally
An animation of the double bottom formation. Source: ThinkMarkets

Bitcoin’s decline to $20,000 in July, then a sharp rise to $25,000, and again to $20,000 in August, partially confirms the double bottom scenario. The cryptocurrency could complete this formation by rising to $25,000 again.

W-shaped price action is followed by a sharp upward move, called a “double bottom breakout” in the ideal scenario.

In the double bottom pattern, the bullish target is found by adding the distance between the top (neckline) of the pattern and the low to the breakout point. This indicates a 50 percent rally in BTC price.

Double bottom formation on Bitcoin chart signals 50% rally
The daily price chart of the BTC/USD pair showing the double bottom breakout pattern. Source: NewsOfFinance

On the other hand, double bottom formations have a margin of error of 21.45 percent. should not be forgotten.

Market in ‘extreme fear’ again

This positive scenario emerged at a time when all risky asset markets were weakening.

BTC’s decline to $20,000 came after Fed Chairman Jerome Powell made statements in his speech last Friday that the monetary contraction policy would continue. Fear and Greed Index market sentiment has also returned to “extreme fear”, according to the report.

On the other hand, Philip Swift, creator of LookIntoBitcoin, pointed out that market sentiment is not as bad as it was in June. “The index never harbors such intense fear as when it dropped to 6 points. The index is currently measuring 23 points.”

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