- Bitcoin is grinding towards a couple of bullish pattern breakouts; the triangle and falling wedge pattern breakout.
- The search for formidable support or bottom will continue before the rally begins.
Bitcoin declines in the last couple of days have been an extension of the breakdown that took place on Friday. The weekend session served as ‘a breather as bulls nursed their wounds. The unsure bulls slid into hibernation giving the mantle back to the bears who pushed Bitcoin towards $8,000. Many analysts believe that Bitcoin is in for another rough ride before the correction begins in readiness for a potential end of the year rally.
While the majority of analysts remained bearish, I am going to explore a couple of scenarios that could help investors remain optimistic regarding Bitcoin. For instance, the formation of a descending triangle pattern suggests that a reversal is in the offing. However, it is important as an investor that you remain realistic. Bitcoin has the potential to break out of this triangle pattern and ignite momentum in a trajectory towards $14,000. You also have to keep in mind that other factors come in play like the volume and the volatility.
XBT/USD 4-hour chart
Looking at the sharply falling Relative Strength Index (RSI), it is clear that the current bearish momentum could last longer. A break below $8,000 is potentially possible. However, a reversal is expected on the RSI hitting oversold conditions.
Meanwhile, within the same triangle is a short-term falling wedge pattern. The pattern is close to a breakout. A lower correction is expected in the search for a formidable support of bottom area. In turn, a ballistic correction to levels close to $10,000 is expected to emanate from the wedge resistance break aided by the above-mentioned triangle breakout.
Bitcoin Key Technical Levels
BitMEX price index: $8,077
Volume: $2 billion
Open Interest: $841 million
Funding rate: 0.01%
RSI: Dropping signals bears’ dominance