The Bitcoin price fell below major support and back into its bear flag on Wednesday. Is this the first sign of an impending crash back down to the bottom of the bear flag, or is this just a healthy pullback before the $BTC price returns to $82K?
Triangle pattern fails – small bear flag forming?
Source: TradingView
The 4-hour time frame for the $BTC price informs us that traders and shorter term investors need to be very cautious going forward. The triangle pattern has failed, and this was a bullish continuation pattern, so not good news for the longs.
To add to the woe, the price fell below not only the major horizontal support level at $80,600, but also back into the bear flag. After such a tough battle to get above both of these strong resistances it will be a hard pill to swallow for the bulls to find the price back inside the bear flag again.
One further cause for worry is that since the big step down on Wednesday from $81K to just below $79K, the price action has started to form a potential small bear flag as the price chops sideways. If the upside momentum signalled by the Stochastic RSI does not carry the price back above the top of the bear flag and what is now major resistance before the indicator lines reach the top of their range, the coming loss of momentum could help to plunge the price a lot further down into the bear flag.
Confirmation of the trendline break?
Source: TradingView
The daily chart is also of concern for the bulls. As well as falling back inside the bear flag, the $BTC price has broken below a trendline that goes all the way back to the beginning of this rally. Also, after retesting horizontal support at $78,000, the price looks to have come back up to confirm the breakdown. If the bulls ever needed a quick surge to the upside of around $2,000, it is now.
Finally, at the bottom of the chart, the RSI reveals that the indicator line has fallen back below the descending trendline once again. Could a bigger fall now materialise?
A fakeout about to occur?
Source: TradingView
The weekly chart illustrates that with a little over 3 days still to go before the weekly candle closes, the $BTC price is below the major horizontal resistance. If the candle closes here, a fakeout will have been the result, and with the Stochastic RSI indicators in this time frame about to roll over and back down, the bulls may have missed their big breakout chance.
The RSI at the foot of the chart shows that the indicator line could be getting ready to confirm a breakout above the descending trendline. That said, if the indicator line keeps dropping, another fakeout to match the one in the price action could be the result.
Things are heating up, and the bears are perhaps starting to lick their lips. Can the bulls still stage a late fightback, or is this the first move as the bears reassert their stranglehold?
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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