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Bitcoin (BTC/USD) Breaks Down Descending Triangle; Where Will it Retreat to?

After price came up above $13,000 briefly in late June, Bitcoin (BTC/USD) started to consolidate. Recently, we noted that this consolidation period was turning out a descending triangle, a smaller version of what we saw in 2018 when price hovered above $6000 for months in this pattern before breaking down to almost $3000.

Bitcoin (BTC/USD) Developing a Familiar Pattern That Hints at a Bearish Outlook

That 2018 consolidation pattern lasted more than 7 months. This one was about 3 months so far. Its like a fractal. If we go with the fractal analogy, we can extend the analogy to predict a bearish correction ahead.

BTC/USD Daily Chart

Bearish Breakdown vs. 200-day SMA:

  • A break below a consolidation support is usually a bearish signal.

  • Note that this break down was accompanied by relatively strong volume and the RSI falling below 30. These are bearish signs.

  • However, price is still trading above the 200-day simple moving average (SMA), and some might look at that as a bullish sign.

  • In my opinion, there is more likelihood that price will break down below the 200-day SMA.

  • However, I wouldn’t be surprised if we do get some short-term support here.

  • Now if price does rebound, I would like to see if it pushes above $10,000 or not. I would anticipate “not”, which would suggest the bearish outlook and an eventual break below the 200-day SMA.

Potential Support:

  • There might be a support pivot around $7000 pivot

  • However, the most critical support right now is probably $6000.

  • I personally have dry powder just above $6000.

  • But, this is bitcoin. Wild volatility is the rule not exception. If breaking below $6000 in 2018 lead to almost $3000, a break below $9000 this time around can send BTC/USD down to $4500.

BTC/USD Weekly Chart

Bitcoin (BTC/USD) Developing a Familiar Pattern That Hints at a Bearish Outlook