“Bitcoin is forming a textbook downside continuation structure called Bearish Pennant whose ultimate breakout target lurks near $16,000.
Bitcoin (BTC) has rebounded by more than 25% after bottoming out at $30,000 during the May 19 crash. But the cryptocurrency continues to tread ahead under the possibility of facing another period of strong sell-offs owing to a classic technical indicator pattern.Bitcoin price in a ‘Bearish Pennant’ Dubbed as Bearish Pennant, the pattern forms when an asset consolidates after a strong move downward and forms a small symmetrical triangle-like price range. It breaks below the range support and continues moving lower. Traders usually estimate the size of the negative breakout move by measuring the height of the earlier move.Bitcoin is currently trading inside a similar bearish pennant structure, fluctuating sideways as it forms a sequence of lower highs and higher lows. Meanwhile, its consolidation structure precedes a massive move downhill to around $20,000. Therefore, if the BTC/USD rate breaks below the pennant structure, accompanied by rising trade volumes, its likelihood of crashing by almost $20,000 is high.The bearish outlook also borrows cues from Bitcoin’s recent bounce. It is worthy to take notice that the cost to purchase one Bitcoin fell from almost $65,000 to $30,000 on May 19 — or by over 50% —followed by a considerable 30% bounce.Bitcoin pennant structure and its primary downside target. Source: TradingViewMeanwhile, market analytics service Income Machine is warning of a “dead cat bounce” scenario emerging in the Bitcoin market, noting that upcoming rallies in BTC/USD could face limitations by further selling pressure near the May 26 highs (the $39,000-$41,000 area). It recommended traders exit their bullish positions near $40,000.What’s more, Income Machine also noted that a failure to hold $30,000 as support would risk crashing bitcoin prices to $16,200 — a level that coincides with the Bearish Pennant target. The analytics firm selected $16,200 because of its historical relevance as support during the November-December 2020 session.Bitcoin bearish outlook presented by Income Machine. Source: TradingView”Conversely, an upside break of the May 26 highs would cause us to reverse our analysis and adopt a more bullish outlook for BTC-USD,” added Income Machine analysts.Pankaj Balani, chief executive and co-founder of crypto derivatives exchange Delta, also anticipated an extended bearish breakdown should the bitcoin price closes below $34,000. Nevertheless, the former UBS alumni limited his downside target to $28,000, 2021’s lowest level. He told Cointelegraph:”Traders would be keenly watching these levels before taking any decisive action. That said, the risk to the Bulls remains higher compared to that of Bears, as longer-term price action is in a downward direction.”Bullish outlookBalani also noted that the current price action signifies demand in the $30,000-$35,000 range. Therefore, an upward swing from the said area could end up breaking the Bearish Pennant — which Balani referred to as Symmetrical Triangle — to the upside.”BTC is forming a classic symmetric triangle and any breakout/breakdown will lead to a significant price move,” he said, adding:”If BTC breaks out of $40K conclusively, a move to $45K can be expected.””
Source: Cointelegraph.com News