Technical Analysis: Bitcoin Aims for $18k Amidst Weak Market Conditions
Bitcoin has broken down below a corrective pattern, indicating the continuation of the downward trend.
After a strong increase since the beginning of the year, Bitcoin appears to have been trading inside an ascending parallel channel. This is a bearish pattern, often leading to a breakdown in most cases.
Indeed, BTC broke down below the pattern on March 8th, causing a sharp drop afterwards. This move caused the price to drop below the $20.4k level, formed by a horizontal support area and the 0.5 Fib retracement support level.
However, the bull side has formed 2 bullish pin bar candles in the last 2 days, showing that selling pressure has weakened in the short term.
Nevertheless, to avoid further decline, Bitcoin needs to quickly reclaim the $20.4k level, otherwise selling pressure will strengthen and cause the price to drop to the next support level at $18.3k.
Currently, the bear side still has the advantage as the RSI indicator enters the oversold zone and has not formed any bullish divergence.
Breakdown the Descending Parallel Channel
The 4-hour chart provides a more bearish outlook. Bitcoin has been declining within a descending parallel channel since the local high of $25.2k. This is a corrective pattern, often leading to a breakout upwards in most cases.
However, Bitcoin broke down below the pattern on March 9th. This is an extremely bearish sign, indicating very strong selling pressure at higher levels.
The price is currently retesting the support line of the channel. The RSI indicator supports the possibility of rejection due to the formation of bearish divergence. Therefore, Bitcoin is likely to continue to decline to recent lows at $19.5k and lower to the $18.3k level, as mentioned above.
Reclaiming the support line of the channel will invalidate this bearish outlook. After that, BTC will rise to the resistance line of the channel at $21.7k.
The most likely outlook shows that Bitcoin will continue to decline in the coming days. The important support level to watch is $18.3k.
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