Bitcoin has hit the convergence of three trendlines that are strong resistance. So far, the $BTC price has been rejected. Will Bitcoin head down again, or could the bulls make a huge effort and break out?
A possible rejection from 3 converging trendlines
Source: TradingView
In the short-term time frame chart above it can be seen that the $BTC price is being rejected from the convergence of three trendlines. The major trendline (firm black line), the top of the descending channel (blue line), and the trendline from the all-time high (faint, dotted line) have all converged, making a strong wall that the bulls are so far unable to penetrate.
It might appear that unless there is some kind of bullish surge, the probability is that the bears are more likely to win this particular battle, given that the Stochastic RSI indicators are approaching the top, from where they will turn back down again. The 8-hour and 12-hour Stochastic RSI indicators are also high up so it just may be that the price needs to come down again in order for these momentum indicators to reset.
Which will win? Head and shoulders or W pattern?
Source: TradingView
Moving out into the daily time frame, the spectre of a head and shoulders pattern is still hanging over the hopes of a continuation of this Bitcoin bull market.
When the $BTC price fell through the major trendline and then came back to confirm this neckline, things did start to look fairly ominous. Since then, the price has rallied back up to the trendline, painting a potential W pattern as it did so. Could this W pattern play out? If it did, this would take the price well above the trendline and would likely negate the head and shoulders pattern.
All this said, we have already seen in the 4-hour chart that there is a good likelihood that the $BTC price will be rejected from the trendline. This still remains to be seen.
$88,000 or $200,000?
Source: TradingView
So here we are once again resting against the parabola that has contained the $BTC price over the entire length of the bull market up to now. If the head and shoulders plays out, this will obviously send the price down through the parabola to the extent of the measured move, which would take it down to the horizontal support line at $88,000 (orange line).
While such an action would appear to completely negate the bull market, we still have the Stochastic RSI indicators approaching their bottom. Bear markets start from the top and not the bottom, so what is coming next could be quite sudden and unexpected. Could the price fall very quickly down to $88,000, or could a super rally begin that takes out an 8-year trendline and soars to $200,000? No one knows the answer.
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.