BNB Price Could Drop More Than 50% With Bull Trap Setup
The price of BNB (BNB) has broken down from an ascending triangle pattern. It may continue to decline in the near future.
Ascending triangle pattern
The price of BNB (BNB) has been trading within an ascending triangle pattern since May 2022. This is a bullish pattern that often leads to a breakout in most cases. However, the price of BNB has failed to break out twice since then (green ellipse). This indicates a lack of buying pressure at higher levels.
Indeed, after two failed attempts, the price of BNB finally broke down from the triangle last week with a large bearish candle. Invalidating a bullish pattern is often followed by a significant decline as it is considered a bull trap.
A downward move equal to the height of the pattern when measured from the breakdown point would bring the price of BNB down to $104, which corresponds to a decrease of over 50% from the current level.
The weekly RSI indicator supports the possibility of further decline as it dropped sharply below the 50 level and is sloping downwards.
Short-term outlook
The 4-hour RSI indicator has formed a significant bullish divergence within oversold territory and broke above its resistance line. This indicates a potential short-term recovery.
If so, the price of BNB could rise to the previous horizontal support level at $265.
However, the candlesticks on the 4-hour timeframe are predominantly bearish engulfing candles with high volume. This suggests that the bears has been controlling the market.
Therefore, this could be seen as a dead cat bounce, and the price of BNB could reverse at minor resistance levels at $240 and $254.
Conclusion
The most likely outlook suggests that the price of BNB will continue to decline in the near future. The most feasible target is found at $104.
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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