A 5.4% gain for the Bitcoin price over the last five days may have come to an end. With the bulls unable to push the price up through the $66K horizontal level, the path of least resistance right now is back down. If the $63K support level fails, the Bitcoin price could come back to test the lows again.
Bearish head and shoulders pattern = BTC to $57K?
Source: TradingView
The only thing stopping the $BTC price from falling right now appears to be a small trendline. This was originally the bottom of a potential bear flag, but as the required touches for the top of the flag did not materialise, the pattern has not been drawn in.
What we could have here is in fact a bearish head and shoulders pattern. The left shoulder starts at the beginning of the small trendline, and then the bigger head which rose to $67K, and then just recently the failed rally at $66,640. As can be seen, the price is currently attempting to drop below the neckline. If it does so, the measured move to the downside could be to a new low at $57,380.
The bulls either have to stop the potential drop at the neckline, or they have to defend the bull market trendline and the $59,600 horizontal level. If all of these supports fail, a new low could be the result.
Why expect a different outcome?
Source: TradingView
So far in this bear market we have seen the $BTC price fall, chop sideways for a period, and then fall again. This has been repeated and now the price is chopping sideways once more. Are we to expect any kind of different result? Perhaps the only thing that can be said in the bulls’ favour is that this sideways chop is not printing out a classic bear flag, at least not yet. Nevertheless, the structure is still bearish.
To add to this, the Stochastic RSI indicators look ready to drop down. Could the price come down from here and retest the bear market trendline?
The bottom is already in?
Source: TradingView
In the weekly time frame it’s still all to play for. A break above $66K could lead to a decent rally to the upside, while a break below the bull market trendline could lead to prices in the low $50K area.
If the latter scenario does take place, that would likely be the bottom, while if the former scenario happens, who knows where the price would go?
Is there a scenario that says the bottom is already in? Most definitely. We have a double bottom, and we have bullish divergence in the weekly time frame. We had quite a depressed bull market, so wouldn’t the bear market be less deep?
Things are coming to a head. Keep watching this space!
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.