The price of Bitcoin (BTC) has confirmed the neckline of the previous bearish pattern as resistance, forming a bearish structure. It is likely to continue declining towards $23,300.
Breaking below the head and shoulders pattern
The price of Bitcoin (BTC) broke below the neckline of the head and shoulders pattern on May 11, confirming the completion of the pattern and signaling a strong downward movement to follow.
Although the price recovered the next day with a pin bar with a very long lower wick, it was rejected by the neckline on May 15 and again on May 18 (red arrows). This is a bearish signal, indicating strong selling pressure at higher levels.
Therefore, BTC appears ready to decline towards the pattern’s target at $23,300, calculated by projecting the height of the pattern on the breakdown point. As this target also aligns with a long-term ascending support, it is likely to provide a bounce once reached.
The daily RSI indicator supports the possibility of further decline as it moves downward along with a descending resistance line and sits below 50.
Failure to recover
Bitcoin has formed a bearish structure on the daily timeframe, indicating that the mainstream is bearish.
The fact that BTC price created a bullish pin bar on May 17 (blue ellipse) and regained the horizontal support area of $27,100 has provided hope for a rally to the short-term descending resistance line at $28,500. before continuing the downtrend.
The BTC price created a bullish pin bar candle on May 17 (green ellipse) and regained the horizontal support level at $27,100 has provided hope for a rally to the short-term descending resistance line at $28,500 before continuing the downtrend.
However, the price sharply declined the following day and violated the low of the pin bar candle at $26,548 (dashed blue line), nullifying the potential for a recovery.
Currently, it is in the process of confirming the $27,100 level as resistance once again. If successful, a strong decline may follow.
Conclusion
Technical indicators suggest that BTC is poised to decline towards the target of the head and shoulders pattern at $23,300.
Reclaiming the $27,100 level may allow for a rise towards the descending resistance line ($28,500) before resuming the downtrend.
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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