Bitcoin is on the edge of the next precipice. Having suffered two relatively sharp falls so far in this bear market, is the next one about to take place? How far could Bitcoin fall? Is there still hope that the bulls can cling on and eventually reverse this negative price action? A small rally before the big dip? Source: TradingView The short-term 4-hour time frame chart reveals that not only has the $BTC price broken down through the neckline of the head and shoulders pattern , but it has also dipped below the bottom of the bear flag, to say nothing of losing major horizontal support into the bargain. So where are we now? The price has come back up to confirm the breakdown of what was horizontal support at $67,850, ( the point of control for the VPVR indicator ) and is now holding $66,000 support. It has also come back to test the underside of the bear flag a couple of times so far. The price action has formed a bullish W pattern but this might only serve to send the price back up to retest the major $69,000 horizontal resistance. The neckline of the head and shoulders pattern is also a likely confirmation target for any last move up by the bulls. This doesn’t necessarily mean that the scene is set, and that all is cut and dried ready for the next potential incoming correction. But unless some fantastic geopolitical or economic news comes out soon, the next big downward move is definitely the more likely option. Price action is moving fast as this article is being written, and $BTC is climbing back towards that possible confirmation of the head and shoulders neckline. A breakdown being confirmed? Source: TradingView The daily chart clearly illustrates the peril that the $BTC price is in right now. Once more drawing similarities with the previous bear flag, it can be seen that the 50-day SMA (blue line) is now acting as resistance, which it did for about a week or so before the big drop from the first flag. The breakdown of the ascending channel in the RSI has happened , and the price has been back to retest and confirm this a couple of times. It would seem that the only bullish factor in this chart is a cross-up of the indicator lines in the Stochastic RSI. That said, these can cross back down again, just as they did for a period of time during the reversal out of the first bear flag. A full measured move to $38,000? Source: TradingView By taking a measurement from the very top of the first bear flag, down to the bottom of the second one, we can find the full extent of the potential next correction. If we then take that measurement, and put it at the top of this bear flag, it can be seen that this could take this next downside move all the way down to $38,000 . Looking left, there is support at this level, so why not a bottom there? The 200-week SMA is about to align with the $60,000 horizontal level, making this a stronger support area for the bulls, but if this fails, it’s $48,000 or $38,000 , with the latter being the more probabilistic outcome. The bottom of the chart shows the Stochastic RSI indicators. These have been the main bullish factor since the beginning of March, but even here, the indicator lines are posturing to cross back down, possibly collaborating with this next downside move. 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.
