Here’s why investors are worried about this Bitcoin (BTC) pattern
Bitcoin (BTC) price action has been bearish in recent weeks. The price now also risks a breakdown from a short-term bearish pattern.
A break from this pattern could be what causes a sharp decline, taking the BTC price to levels not reached since early March.
BTC Price Consolidates Resistance
BTC price action since early April has been bearish. This was highlighted by the bearish engulfing candlestick pattern on April 17 and 24, and the two subsequent rejections (red icons) in the following weeks.
The move definitely validated the $29,800 area as resistance. The resistance area is present in the weekly timeframe. So it makes it possible that a local peak has been reached.
Despite the bearish price movement, the weekly relative strength index (RSI) remains positive. The indicator is currently above 50 and rising.
Traders use the RSI as a tool to determine whether a market is overbought or oversold and decide whether to buy or sell an asset. If the RSI is above 50 and trending upwards, it indicates that the bulls are in control.
Conversely, if the RSI falls below 50, it suggests that the bears are in control. So the current RSI reading suggests that the long-term trend is still bullish.
Bitcoin Price Prediction: A Correction Awaiting?
The current technical analysis of the daily timeframe indicates a bearish Bitcoin price prediction. This is due to the creation of a head and shoulders pattern, usually seen as a bearish pattern.
This pattern consists of an initial high, then a peak that is higher than the previous one, followed by a second peak of the same length as the first. Afterwards, a drop breaks the neck and catalyzes a heavy fall.
If the potential breakdown in price follows the full height of the pattern (white), it could cause the digital asset to fall to a minimum price of $23,400. This is in line with the 0.5 Fib retracement support level (black).
According to the Fibonacci retracement principle, after a significant price change in one direction, the price often partially retraces or returns to a previous price level before continuing in its original direction.
Despite this bearish prediction, if the price were to move above the right shoulder (red line) at $30,000, it would indicate that the trend is not bearish.
Instead, it could lead to a rise towards the next long-term resistance at $36,500.
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Disclaimer
In line with Trust Project guidelines, this price analysis article is intended for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, objective reporting, but market conditions are subject to change without notice. Always do your own research and consult with a professional before making any financial decisions.
