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The classic technical indicator predicts another massive fall in the price of Bitcoin with a goal of $ 16K

The classic technical indicator predicts another massive fall in the
The classic technical indicator predicts another massive fall in the

Bitcoin (BTC) has recovered by more than 25% after hitting funds at $ 30,000 during the May 19 collapse. But the digital currency continues to advance in the face of the possibility of facing another period of strong settlements due to a classic technical indicator pattern.

Bitcoin price in a ‘bearish banner’

Named the bearish pennant, the pattern is formed when an asset consolidates after a strong downward movement and forms a small symmetrical triangle-shaped price range. It breaks below the strip support and continues to move downward. Operators generally estimate the size of the negative break motion by measuring the height of the previous move.

Bitcoin is currently traded within a similar bearish pennant structure, which fluctuates laterally as it forms a sequence of lower highs and lows. Meanwhile, its consolidation structure precedes a massive downward movement of around $ 20,000. Therefore, if the BTC / USD rate breaks below the banner structure, accompanied by an increase in trading volumes, its probability of collapsing by almost $ 20,000 is high.

The bearish outlook also borrows signals from Bitcoin’s recent rebound. It’s worth noting that the cost of buying a Bitcoin dropped from nearly $ 65,000 to $ 30,000 on May 19, or more than 50%, followed by a considerable 30% rebound.

Bitcoin banner structure and its main downward target. Source: TradingView

Meanwhile, market analysis service Income Machine warns of an emerging “dead cat bounce” scenario in the Bitcoin market, noting that upcoming rises in BTC / USD could face constraints due to increased selling pressure near of the May 26 highs (the $ 39,000- $ 41,000 area). He recommended traders move out of their bullish positions near $ 40,000.

In addition, Income Machine also noted that not holding $ 30,000 as support would run the risk of bitcoin prices collapsing to $ 16,200, a level that coincides with the flag bearer’s decline. The analysis firm selected $ 16,200 because of its historical relevance as support during the November-December 2020 session.

Bitcoin bearish outlook presented by Income Machine. Source: TradingView

“By contrast, a break above the May 26 highs would make us reverse our analysis and take a more optimistic outlook for the BTC-USD,” Income Machine analysts added.

Pankaj Balani, executive director and co-founder of the cryptocurrency exchange Delta, also anticipated a prolonged bearish collapse in the event that the price of bitcoin closes below $ 34,000. However, the UBS alumnus limited his downward target to $ 28,000, the lowest level since 2021. He told Cointelegraph:

“Operators would be vigilant at these levels before taking any decisive action. That said, the risk for the Bulls remains higher compared to the Bears, as long-term price action is in a downward direction.

bullish outlook

Balani also noted that the current price action means a demand in the range of $ 30,000 to $ 35,000. Therefore, an upward oscillation from this area could end up breaking the bearish pennant, which Balani referred to as the symmetrical, rising triangle.

“BTC is forming a classic symmetrical triangle and any break / break will lead to a significant price movement,” he said, adding:

“If BTC exceeds $ 40K conclusively, a move to $ 45K can be expected.”

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