Bitcoin (BTC) has rebounded more than 25% after hitting a low of $ 30,000 during the May 19th slide. However, the cryptocurrency continues to make strides in the ability to go through another phase of heavy sales based on a classic pattern of technical analysis.
Bitcoin price is in a “bearish pennant”
Also known as the bearish flag, the pattern forms when an asset consolidates after a sharp downward move, forming a small symmetrical price range in the shape of a triangle. It breaks the support range and continues to move down. Traders often estimate the size of the downward breakout move by measuring the height of the previous move.
Bitcoin is currently trading within a similar bearish pennant structure, moving sideways as a series of lower highs and higher lows emerges. Meanwhile, its consolidation structure is preceded by a massive downward move towards $ 20,000. So, if the BTC / USD pair falls below the pennant structure, accompanied by increasing trading volumes, the chances are high that the price will drop to $ 20,000.
The bearish outlook is also based on Bitcoin’s recent rebound. Keep in mind that on May 19, the cost of buying a bitcoin dropped from nearly $ 65,000 to $ 30,000, which is more than 50%. followed by a sizeable 30% recovery.
The market analysis service is now Income Machine warns of the emergence of a “Dead Cat Bounce” scenario in the Bitcoin market and notes that upcoming rallies in BTC / USD due to increased selling pressure near the highs of May 26th (the zone between USD 39,000 and USD 41,000 ) could be limited.. He recommended traders to close their bullish positions near $ 40,000.
It is more, Income Machine also pointed out that a failure to hold $ 30,000 as support could drop the price of Bitcoin to $ 16,200, a level in line with the bearish pennant’s goal. The analytics firm chose the $ 16,200 level as a support for the November to December 2020 period due to its historical relevance.
“Conversely, a break above the May 26 highs would cause us to reverse our analysis and take a more bullish outlook for the BTC / USD pair.” Income Machine analysts add.
Pankaj Balani, CEO and co-founder of the crypto derivatives exchange Delta, he also anticipated a sustained bearish breakout if Bitcoin price closes below $ 34,000. However, the UBS alumnus capped his drop target to $ 28,000, the lowest level in 2021. He told Cointelegraph:
“Traders will closely monitor these levels before taking decisive action. However, the risk to the bulls is still higher compared to the bears as the longer-term price movement is still there. In a bearish direction!”
The bullish outlook for Bitcoin
Balani noticed that too The current price promotion means demand in the range of $ 30,000 to $ 35,000. Hence, a bullish turn from this zone could break the bearish pennant that Balani called the “symmetrical triangle”.
“BTC forms a classic symmetrical triangle and a breakout in either direction will cause significant price movements.” he said and added:
“When BTC finally crosses the $ 40,000 mark, expect a move towards $ 45,000.”