Bitcoin rebounded from a long-term horizontal resistance area and has been giving up since. BTC is now trading inside a short-term bearish pattern
A bearish break of this pattern’s neckline could trigger a sharp drop in the BTC exchange rate. It will also confirm a long-term rebound.
BTC bulls got backlash
As the results of technical analysis show, bitcoin (BTC) formed a bearish takeover candle during the week of April 17 – 24 and after that weakened considerably..
This pattern completely neutralizes all of the growth of the previous candle. The closing price of such a candle is lower than the opening price of the previous candle on this timeframe.
Accordingly, this indicates a bearish mood.
The following week the price tried to rise, but was stopped by the $29 800 resistance area (red icon).
Thus, all of the market movements over the past three weeks have been like a false bullish breakout, followed by the transformation of the breakout level into a resistance area (red icon).
These are bearish signals, and they usually precede a decline in price.
Despite this, however, the Relative Strength Index (RSI) remains bullish as it stays above the 50 mark and rises.
This index is a momentum indicator, indicating an overbought/oversold market, depending on whether it is above or below the 50 mark.
The next area of resistance is located at $36,500 and the closest support is around the average price of $24,000.
Will bitcoin start a correction
The daily timeframe also confirms a bearish scenario for BTC. Here the “head-and-shoulders” pattern appeared on the chart, which is considered bearish.
After the formation of the second shoulder there is usually a fall and a break of the neckline.
If this prediction materializes and the size of the decline equals the height of the whole pattern (white), it would mean the collapse of BTC to $23,400.
If this prediction materializes and the size of the decline equals the height of the whole pattern (white), it would mean the collapse of BTC to $23,400.
There is also a Fibo 0.5 retracement level (black). Fibonacci levels are traditionally considered the most probable springboards for stopping and reversing the price after a significant advance in any one direction.
At those levels, the market is expected to regain some of the distance covered and only then resume the move in the original direction.
On the whole, the current bitcoin picture looks bearish. Only a rise above the “right shoulder” of the pattern (red line) of $30 000 will indicate that the trend is not bearish.
However, only the weekly RSI index now supports such a scenario. In this case, BTC will be able to take the course to the next long-term resistance of $36,500.
In this case, BTC will be able to take the next long-term resistance of $36,500.