Bitcoin’s burst above the US$50,000 level didn’t last long, and chart patterns signal its rally since July is at risk of fading.

The largest cryptocurrency fell as much as 4.9 per cent Thursday to US$46,322, with other tokens including Ether retreating along with the Bloomberg Galaxy Crypto Index. The drop pared Bitcoin’s rally from a July 20 low to about 60 per cent.

Bitcoin was trading at US$47,342 as of 10:10 a.m. in New York.

John Bollinger, inventor of Bollinger bands, in a tweet suggested taking some profits or hedging. Katie Stockton at Fairlead Strategies cited DeMark market-timing indicators as flagging about two weeks of “sideways-to-lower” prices.

Two charts help sum up the current situation for Bitcoin.
 

SHRINKING BANDWIDTH

Narrowing Bollinger bands -- a popular technical indicator that highlights volatility -- -- indicate the Bitcoin rally is flagging and that the virtual currency faces a zone of resistance from US$50,000 to US$51,000. A key threshold to watch is the middle line of the Bollinger study at about US$46,700.

POINT AND FIGURE

A so-called point and figure analysis -- which spotlights the direction of prices without a time dimension -- signals Bitcoin faces a challenge to scale levels around US$50,940 on a closing basis. A failure to breach the 45-degree trend-line of the point and figure chart could strengthen the bearish case.