Bitcoin has broken below a correction pattern, indicating that the downtrend is continuing.
important price range
Bitcoin appears to have been trading within an ascending parallel channel after a strong rally since the start of the year. This is a bearish pattern that usually leads to a breakout in most cases.
In fact, BTC broke below the pattern on March 8, leading to a sharp drop later. The move took the price below the $20.4k area formed by horizontal support and a 0.5 Fib retracement support.
Even so, the bulls have formed 2 bullish pin bar candles in the past 2 days, indicating that selling pressure has weakened in the short term.
However, to avoid further declines, Bitcoin needs to recover the $20.4k area quickly, otherwise the selling pressure will intensify and cause the price to fall to the next support area at $18.3k.
For now, bears still have the upper hand as the RSI has entered oversold territory and has yet to form any bullish divergence.
BTC/USDT daily chart | Source: TradingView
Break Down Parallel Channel
The 4-hour chart offers a more bearish outlook. Bitcoin has been inside a descending parallel channel since the local high of $25.2k. This is a corrective pattern that usually results in a breakout to the upside in most cases.
However, Bitcoin fell below the pattern again on March 9. This is an extremely bearish signal, indicating that selling pressure at higher levels is very strong.
The price is currently retesting the support line of the channel. The RSI indicator is leaning towards rejection due to a bearish divergence forming. Therefore, as mentioned above, Bitcoin may continue to fall towards the recent low of $19,500 and drop to the $18,300 area.
A retracement of the channel’s support line would invalidate this bearish outlook. BTC will then rally to the channel’s resistance line at $21.7k.
BTC/USDT Hourly Chart | Source: TradingView
The most likely scenario indicates that Bitcoin will continue to fall in the coming days. The key support area to watch is $18,300.
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