After a sequence of higher highs and higher lows that took the $BTC price all the way to $67K, a recent lower high and lower low may be a sign that the short-term trend is about to change. Could this be the start of a descent into the true bear market bottom?
Head and shoulders top pattern
Source: TradingView
A quick glance at the 4-hour time frame reveals that we have a head and shoulders top. What’s more, the pattern has played out and now the $BTC price has fallen through the neckline, perhaps on its way down to the full extent of the measured move, which the chart tells us would be down to around $60,500.
Be that as it may, this might not be a sharp decline straight down to this level. The price looks as though it has found support at the horizontal level of $63,250. The next move may well be a bounce, and if it is, the bounce could stop short at the neckline of the head and shoulders pattern, making this a confirmation, before heading back down again.
Having said this, the bulls may not be about to throw in the towel just yet. Short-term Stochastic RSI indicators are on their way down to their bottom limits, and once there it may not be too long before they signal upside momentum again. It may just be a case of seeing whether the measured move might play out first.
Worrying signs in the daily chart
Source: TradingView
In the daily chart concerning factors are showing themselves. For a start, the recent peak that stopped just shy of $67K was a lower high than the peak made in mid-June.
Secondly, the attempts to break out of the descending channel are fakeouts. The head and shoulders top pattern mentioned earlier is likely the catalyst for a trend change back to bearish price action.
Finally, and probably most importantly, the wedge pattern in the RSI looks as though it may be about to break down. The indicator line is showing just below the bottom trendline. If the breakdown is confirmed by the end of Tuesday, look out for the $BTC price to head down to the bottom of the descending channel.
Weekly Stochastic RSI indicator lines rolling over?
Source: TradingView
It’s still very early in the week, but as it stands, the current weekly candle is red, and threatening to break down below the important $63K support level and the bull market trendline. If it does so, the logical path would be for the $BTC price to potentially come down to the bottom of the descending channel.
Probably the most worrying component of the above chart is the Stochastic RSI, which has its indicator lines in the process of rolling over. One only has to look at the previous two times this happened to see the resulting crashes. Again, there is still the rest of the week for the bulls to try and put a stop to this, but if they are not able to, and the indicator lines do confirm a cross to the downside at the end of this week, stand by for what could be a final rapid descent into a new bear market bottom.
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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