The Bitcoin (BTC) price has evolved into a critical position, presenting traders with a conundrum. On the one hand, the asset has set a new all-time high for the number of transactions, signifying that the network activity is continuing to increase in spite of the price's current bearish outlook. On the other hand, the BTC is trading within a restrictive channel of bearish patterns, raising speculation that a significant breakdown is coming.

The asset began declining after shortly after creating a bearish engulfing candlestick two weeks ago, which is when the price closed lower than the previous period's high. Furthermore, the $29,800 resistance area forced the price to rapidly depreciate again last week when it attempted to surge upwards, leading traders to classify it as strong resistance. This is also demonstrated by the fact that the BTC price invalidated the 0.618 Fib retracement level.

Additionally, the Relative Strength Index (RSI) hovers above the 50-mark and still shows a slight upward trend. Traders use this metric to evaluate market behaviour and make buy/sell decisions. Therefore, the fact that the RSI still indicates a bearish trend is a cause for slight concern.

The Bitcoin price is currently trading inside of two bearish patterns, a descending parallel channel and a head and shoulders pattern. Descending parallel channels usually indicate a bearish outlook and the fact that the BTC price was rejected by the midline several times only solidbased the formation's potential. Head and shoulders patterns point to similar forecasts and have been followed by far-reaching decrease in prices in the past.

Should the bearish perspective come to fruition, the Bitcoin price could plunge all the way down to $23,400 and breach the 0.5 Fib retracement support level. The intermediate support area located around $25,000 might pose as a barrier, however.

To cancel out the bearish forecast, the Bitcoin (BTC) price must break out of its current boundary by piercing the $30,000 resistance which also coincides with the midline of the ascending parallel channel. If the asset manages to exceed the $31,300 upper boundary of the channel, a strong increase in price could follow.



Other News from Today