The price of Bitcoin (BTC) has been rejected by a long-term resistance zone and may revisit the pattern it broke out of earlier. The trend is still considered bullish.
Weekly outlook
After touching a low of $15,400 in June 2022, Bitcoin started to increase and formed the right shoulder of an inverse head and shoulders (H&S) pattern. This is a bullish pattern that often leads to a trend reversal to the upside.
Indeed, the price broke out above the pattern in the week of March 13-20, 2023, with a large bullish candle, marking the formation of a long-term bottom. This technical pattern has a target of $35k, alculated by connecting the height of the pattern to the breakout point.
However, Bitcoin encountered strong selling pressure at the long-term resistance zone of $31,000. Currently, it is forming a bearish engulfing candlestick pattern on the weekly timeframe (green ellipse). This is a bearish pattern, indicating that the bears has taken over the market.
Therefore, if this pattern is confirmed, the price of Bitcoin could drop to the neckline of the inverse head and shoulders pattern at $25,200.
The weekly RSI indicator is still above 50 and has a bullish structure. Therefore, the current decline could be viewed as a correction within an uptrend.
Nearest horizontal support
After a sharp decline, Bitcoin retraced back within the previous trading range of $26,500 to $28,700.
The BTC price has now broken down below the middle line of the range and is heading towards the support level of the range at $26,500.
The RSI indicator supports the possibility of a drop to this support level when it is in oversold territory and has not created any bullish divergence.
Conclusion
The trend of Bitcoin is still bullish. However, technical indicators suggest that the price of BTC may drop to at least $26,500 before any significant rebound.
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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