On May 29th, the Bitcoin price demonstrated its third reversal from the resistance trendline of the channel pattern that has been driving a correction phase for nearly two months. This bearish reversal caused a 4.6% decline in Bitcoin’s market value and brought its price down to $27,201. This decrease surpassed the local support of $27,500, suggesting that the Bitcoin price may be set for a longer correction period.
Despite the current correction phase, Bitcoin’s price is still above the 50% Fibonacci retracement level, indicating that the overall market trend remains bullish. However, a breakdown below $27,500 would put Bitcoin at risk of a 7-11% drop. The intraday trading volume in Bitcoin has reached $14.2 billion, reflecting a 21% loss.
In many cases, a bearish reversal from the channel pattern’s resistance trendline leads to a new bear cycle and a downturn to the lower trendline. Consequently, with the current bearish market sentiment, the Bitcoin price is likely to plunge 7% and reach the substantial support level of $25,000.
This support level, which aligns with the 38.2% Fibonacci retracement level and the 200-day EMA, forms a strong accumulation zone for potential buyers. If buyers fail to maintain this level, Bitcoin’s price could drop sharply to $24,000 and retest the lower trendline.
It is worth noting that both the $25,000 and $24,000 levels serve as crucial demand zones that could potentially bring an end to Bitcoin’s correction phase. In general, the falling channel pattern tends to trigger a significant increase once the resistance trendline is broken. Therefore, buyers interested in entering the market should wait for a breakout above the overhead trendline to restore bullish momentum.
Such a breakout may help Bitcoin’s price recover and return to $31,170. Additionally, the Moving Average Convergence Divergence (MACD) chart shows the MACD (blue) and signal (orange) lines moving closer to a bearish crossover, which would provide further confirmation of a drop to $25,000. On the other hand, the Supertrend indicator displays a red bar, suggesting that the short-term bearish trend in Bitcoin is still intact.
While some market analysts remain optimistic about Bitcoin’s future trajectory, it is crucial for investors to conduct thorough research before investing in cryptocurrencies, as market conditions can change rapidly, and the opinions presented here are solely those of the author.
Source: Coingape
