The price of Bitcoin (BTC) has confirmed the neckline of the previous bearish pattern as resistance. There is a possibility that it will decline to $23,000 in the future.
Head and Shoulders Pattern
Bitcoin (BTC) has followed the head and shoulders pattern since March 17th. This is a bearish pattern that often leads to breakdowns in most cases.
Indeed, the price of BTC has broken below this pattern and confirmed it as resistance on May 15th (red arrow). This is a bearish signal, confirming that the trend has shifted to a downtrend.
The target of this pattern is $23,300, calculated by projecting the height of the pattern onto the breakdown point.
Since this target also coincides with a long-term ascending support line, it is likely to provide a bounce when reached.
The daily RSI indicator supports the possibility of further decline as it moves downwards along with a descending resistance line and stays below 50.
Bearish Structure
In addition to breaking below the head and shoulders pattern, Bitcoin has formed a bearish structure on the daily timeframe. This indicates that the overall trend is bearish.
However, BTC formed a bullish pin bar candle yesterday (green arrow) and reclaimed the horizontal support zone at $27,100. Therefore, the price of BTC could rise to the short-term descending resistance line at $28,500 before continuing the downtrend.
This short-term bullish view will be invalidated if the price breaks below the lowest point of the pin bar candle at $26,548.
Conclusion
The most likely prospect indicates that the price of BTC will decline to $23,300 in the future. However, it may experience a short-term recovery before doing so.
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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