Bitcoin (BTC) The price has fallen since it was rejected by a long-term horizontal resistance area. It is now trading in a short term bearish pattern.
A breakdown from the neckline of this pattern could lead to a sharp decline. In addition, it will validate the long-term refusal.
BTC price deviates and is rejected
Bitcoin price declined significantly after forming a bearish engulfing candlestick pattern during the week of April 17-24. This type of pattern occurs when the entire gain from the previous period is wiped out in the next period. It indicates a downtrend.
While the price tried to rise next week, it was stopped by the $29,800 resistance area (red icon). So, the movement over the past 3 weeks is like a failed breakout and validation of that area as resistance (red icon).
These are all bearish signals that usually lead to downward movements.
Despite these bearish signs, the Weekly Relative Strength Index (RSI) remains positive, as it is above 50 and rising. Traders use the Relative Strength Index (RSI) to assess whether the market is overbought or oversold and to determine whether to buy or sell an asset.
Bulls are in control if the RSI is above 50 and heading higher. However, the opposite is true if the RSI falls below 50. It should be noted that the number of intermediate trades reached a new record high last week.
The next closest resistance area is at $36,500, while the nearest support is at $24,000 average price.
Bitcoin Price Prediction: Is Correction Waiting?
Technical analysis from the daily time frame provides a bearish prediction for the Bitcoin price. The main reason for this is that the price has created a head and shoulders pattern, which is considered a bearish pattern.
The pattern consists of a peak higher than the one before it and the one following it. Once the second is finished, the price usually drops quickly, breaking the neckline.
If the potential price collapse extends to the entire height of the pattern (white), it will send the digital asset down to $23,400. This is aligned with the 0.5 Fibonacci retracement support level (black).
According to the principle of Fibonacci retracement levels, after a significant price change in one direction, the price is expected to partially retract or return to the previous price level before resuming in its original direction.
Despite this bearish prediction for bitcoin price, a move above the right shoulder (red line) at $30,000 would mean that the trend is not bearish.
Alternatively, it could lead to a rally towards the next long-term resistance at $36,500.
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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 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.