Bitcoin's Rising Wedge Pattern Signals Potential Pullback

A notable price pattern has emerged in Bitcoin's (BTC) trajectory, indicating a potential downturn on the horizon.

BTC has surged from $60,000 to new all-time highs surpassing $70,000 within a span of just under two weeks. This surge has taken the form of a "rising wedge," a pattern considered bearish in technical analysis circles.

A rising wedge pattern consists of upward-sloping trendlines connecting highs and lows, converging towards a single point known as the apex. The convergence of these trendlines signals a gradual weakening of bullish momentum. Consequently, a breakdown of the wedge, marked by a move below the trendline connecting lows, signifies a bearish shift, opening the door for further downward price movements.

Additional indicators, such as the 10-day rate of change, which gauges the speed of price surges or declines over a 10-day period, have diverged from the rising prices.

This disparity suggests that downside momentum is gathering strength, often serving as a precursor to price retracements. During the bull markets of 2017 and 2020-21, pullbacks of 20% or more were common occurrences.