Pervading gloom spread through the crypto market as Bitcoin crashed to $181,000 in early trading on Friday. $1.72 billion in total liquidations also helped to send market sentiment into extreme fear. Is the bear market now confirmed, or was this the final capitulation event before a strong rally?
$BTC price crashes through support and out of falling wedge
Source: TradingView
There is no denying it, Bitcoin is in a difficult place. The $86,000 horizontal support has now become resistance, and a bullish-looking falling wedge pattern has been negated.
The $BTC price is now in double bottom territory, given that the last local low is at $80,600. The price could come down further to $80,000 and even below, and still be in a valid double bottom set-up. Yes, this could be grasping at straws, but if a capitulation bottom is to form, this would be an ideal pattern for a reversal back to the upside.
Bounce territory – will the bulls react?
Source: TradingView
Perhaps the first thing one notices when zooming out into the daily time frame is the ominous looking breakdown out of the bear flag (purple lines) and the small falling wedge (pale green). This does not bode well and could be the early stages of a much bigger move to the downside – probably in line with a bear market.
This said, there does still appear to be an opportunity for the bulls to claw their way back from here. Firstly, as already mentioned, the price has come down to a similar level to the last local bottom at around $80,000, so that raises the possibility of a double bottom.
Also, it can be seen that the $BTC price came down more or less perfectly to touch and retest the huge falling wedge pattern. This may lend its weight to a bounce.
Bear targets point to a fearful roller coaster ride
Source: TradingView
In the weekly time frame the exit out of the bear flag still looks the scariest part of the chart from the perspective of the bulls. The price crashed through the bottom and rose to confirm the breakdown – a classic bear flag so far.
At the bottom of the chart, there is something that no bull wants to see, and that’s a roll over of the Stochastic RSI indicator lines. If they head back down to their bottom limit, this would likely coincide with a price drop down to the low $70,000 region, or $69,000 which was the top of the last bull market. Even worse than this, the full measured move out of the bear flag would take the $BTC price down to $53,000. This could be a hell of a roller coaster ride.
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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