Bitcoin Price Future After Recent 10% Drop

Bitcoin (BTC) price fell sharply after creating a bearish candlestick last week, breaking out of a short-term pattern in the process.

Bitcoin price may have reached a local top, which means that an important correction is imminent. However, the price started to rebound yesterday. How does that fit into the long-term movement?

BTC price failed to clear the crucial resistance

Bitcoin price fell sharply last week and created a bearish engulfing candle. This is a type of bearish candle where the price negates the gains of the entire previous period. It was confirmed with a closing lower than the opening of the previous period.

Furthermore, the candle validated the $31,000 horizontal area as resistance (red icon). This is a crucial resistance level as it previously offered support since the beginning of 2021.

As a result, failing to get them back is a huge sign of weakness. If the price breaks, the area is expected to provide support again. However, due to the rejection, the district still acts as resistance. If the decline continues, the nearest support area will be at $25,000.

BTC/USD daily chart. source: TradingView

Despite the rejection, the weekly RSI remains bullish, as it is above the 50 level and is increasing. tRadar uses the RSI as a momentum indicator to assess whether the market is overbought or oversold, and to determine whether to accumulate or sell an asset. If the RSI reading is above 50 and the trend is up, the bulls still have the advantage, but if the reading is below 50, the opposite is true.

Bitcoin Price Prediction: Is This the First Phase of a Correction?

Technical analysis from the daily time frame provides a bearish prediction for the Bitcoin price. There are two main reasons for this.

First, the price broke down from an ascending parallel channel. A bullish parallel channel is a type of corrective pattern in which the price moves within parallel support and resistance lines before finally breaking out. Since the channel is heading up, it means that the prevailing trend is downward, and therefore bearish.

Subsequently, the daily RSI created a bearish divergence (green line). This is the type of event in which a corresponding increase in momentum is not accompanied by an increase in price. Downward movements often follow, as was the case for BTC.

Due to these readings, the most likely future price scenario is to validate the channel as resistance, most likely at $29,500, before resuming the bearish move. The highest level can be reached in the next 24 hours.

Bitcoin (BTC) Price Prediction
BTC/USDT daily chart. source: TradingView

On the other hand, a move above the yearly high of $31,000 would invalidate this bearish outlook. As it could also cause a breakout from the long-term resistance area of ​​$31,000, it could cause a quick injection of the next resistance at the $46,000 average price.

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In line with Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to providing accurate and unbiased 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.

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