[Market Analysis] Bitcoin price forms double bottom pattern, potential reversal?

Bitcoin technical analysis - potential reversal?

Bitcoin price has formed a double bottom pattern on the hourly chart but has yet to break the neckline before confirming a reversal.

Key points :

Bitcoin prices have been falling recently, but it seems that sellers are getting tired.

A small reversal pattern can be seen on the hourly chart, suggesting a possible short-term reversal.

The price failed to break above $645 in the last two attempts, forming a double bottom pattern.

Bitcoin price has formed a double bottom pattern on the hourly chart but has yet to break above the neckline before confirming a reversal.

Technical indicators

The 100-day simple moving average (SMA) is below the long-term 200 SMA, so the lowest resistance is on the downside and a wave of selling could set in. However, the distance between the two moving averages is narrowing, so a crossover could occur, attracting buyers to join the fray.

In this case, the price of Bitcoin may be strong enough to break the neckline of the double bottom pattern at $665 and then move towards the next resistance at $680. The Stochastic index is pointing upwards, indicating that buyers are in control of the price movement.

However, if the sellers regain momentum, the price is likely to test the $645 support again. A downside break could carry the price towards the main $600 support.

Market Dynamics

Risk aversion seems to have returned to financial markets recently as there are some uncertainties in the European region. In Spain, the king asked Prime Minister Mariano Rajoy to hold a vote of confidence as the election results failed to form a majority government. In Italy, the banking crisis seems to be getting worse as its third largest bank has not been able to obtain funds from large banks and lenders.

The United States will release the advance reading of second quarter GDP today, and traders expect a 2.6% growth rate. This is a faster growth compared to the 1.1% in the first quarter, which has increased expectations for a rate hike in September. If the data is higher than expected, then the price of Bitcoin will fall, while the US dollar will be supported by fundamentals and risk sentiment.