Bitcoin Price Analysis: Bearish Continuation Pattern Could Signal End of Bullish Rally
Throughout the past couple weeks, bitcoin has witnessed a remarkable drop in price falling from $20,000 to $6,000. Soon after bottoming at $6,000, optimistic investors jumped at the opportunity to grab a discounted coin. Is this increase sustainable and does this indicate the conclusion of this extreme correction?
Let us Look at the macro trend:
Figure 1: BTC-USD, 1-Day Candles, Macro Trend
Among the most concerning things concerning the wellbeing of the trend is that the breakdown of the parabolic and linear tendencies. Both tendencies lasted a long time and represented the whole life of a bull market. A breakdown of those trends marks the launch of a brand new marketplace and a new fad. Whether that will be a continuing bear market or we’ve bottomed out and are starting a bull market remains to be seen, however a couple of items are sticking out there toward the possibility that this correction may not be completed just yet.
Figure 2: BTC-USD, 1-Day Candles
If we appear at Figure 1 we note that this is actually the first time because 2015 (the conclusion of the final bear market) which BTC-USD has been under the 200 EMA. During the life span of the bull market, bitcoin has found support on the 200 EMA. But in the time of this guide, the price is trending under the 200 EMA and is presently in the process of analyzing the potency of its immunity level.
Secondly, we could observe a notable fall in total volume because the price jumps out at $6,000. Each daily candle because we bottomed out has noticed less and less quantity, signaling a lack of attention from bigger buyers in these prices. This price pattern can yield a bearish continuation in the kind of a bear flag. Bear flags are short intermittences in bearish tendencies where the price briefly rallies because of bullish speculation, but neglects to continue up. The texbook indication of a bearish continuation is a short rally coupled with decreasing volume.
Figure 3: BTC-USD, Daily Candles, Potential Bear Flag
The quantified move of the bear flag could have us targeting someplace between $3,000 to $4,000. I really don’t think about this price target from the query since the most past bear markets have afforded a 78 percent retracement at price. Presently, our 78 percent retracement stays around $4400.
- Bitcoin has seen a local bottom around $6,000.
- A weakening rally has left bitcoin testing strong resistance on diminishing volume.
- A potential bearish continuation could send bitcoin down to the low $4,000s, after everything is said and done.