Bitcoin (BTC) Price Breaks Short-Term Pattern, Signaling Potential Downside Target Ahead
The price of Bitcoin (BTC) was rejected by a long-term resistance and broke down below a short-term pattern. It is likely to continue to correct in the near future.
The price of Bitcoin (BTC) dropped after being rejected by a strong resistance zone at $48,000 in the week from January 8 to 14, 2024. The rejection (red arrow) created a large bearish candle with a long upper wick, a sign of selling pressure.
In the previous week, the BTC price created a long-legged Doji candle, showing a balance between bulls and bears. However, the price broke down below the lowest level of the Doji candle at $40,283 this week. This is a bearish signal, indicating that the balance was resolved in favor of the bears.
The weekly RSI dropped below 70 and is sloping down, showing that the bulls have lost control.
Therefore, the BTC price is likely to continue to decline to the important support zone at $37,000, formed by the resistance line of the previous long-term wedge and the 0.5 Fib retracement level.
Breaking The Short-term Pattern
The BTC price broke down below a short-term ascending parallel channel on January 18, 2024, marking the continuation of the downtrend from the yearly high.
This move also caused the price to break down below the horizontal support zone at $40,500 with a large bearish candle yesterday, suggesting that the bears are dominating the market.
The daily RSI dropped below 50 and is sloping down, supporting the likelihood of further decline.
Therefore, the BTC price is likely to continue to decline to the target of the channel at $37,130, found by projecting the height of the pattern to the breakdown point.
Since this target coincides with the important support zone on the weekly time frame, the BTC price may bounce up when it reaches it.
The most likely scenario suggests that the BTC price will continue to decline to the support zone at $37,000.
This view will be invalidated if the BTC price breaks out above the nearest high at $43,600.
Disclaimer: Please note that this article is for informational purposes only and should not be taken as investment advice. As an investor, it is important to do your own research before making any decisions. We are not responsible for any investment decisions you make based on this information. Not Financial Advice.
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