Bitcoin (BTC) price broke out of a long-term formation on May 10, and the decline accelerated after confirming resistance on May 23.
While a short-term rally is possible, price action and the number of waves on the daily time frame suggest that BTC prices will fall even more.
Bitcoin price continues to fall after breaking support
Technical analysis on the daily time frame shows that BTC price has broken out of a head and shoulders pattern. This is considered a bearish formation. So crashes are to be expected.
After the May 10 crash, the price fluctuated below the pattern’s neckline for about two weeks. Afterwards, the price confirmed this line as resistance (red icon) on May 23 and plummeted. This verifies the problem.
Also, the RSI is also giving a bearish reading when it is below 50 and sloping down.
BTC/USDT daily chart | Source: TradingView
BTC Price Prediction: When will the drop be complete?
A closer look at the trend reveals that, in addition to the price action, Elliott Wave Theory and Fibonacci levels also support further declines.
First, price action suggests that if price declines by an amount equal to the height of the head and shoulders pattern (white), it will bottom near $24,000.
Second, the wave numbers show that the price is in a complex WXY correction structure. By studying long-term price patterns and investor sentiment, technical analysts use the Elliott Wave Theory to determine the direction of trends.
If the wave number is correct, the price will bounce back in the short term before continuing to fall.
Finally, there is a confluence of Fib support levels between $23,200 and $23,900, created by the short-term 0.618 Fib (white) and the long-term 0.5 Fib (black).
The rationale behind Fibonacci retracement levels suggests that after a significant price move in one direction, the price will retrace or partially rebound from the previous move before resuming in the original direction. Therefore, this area can act as a bottom.
BTC/USDT daily chart | Source: TradingView
Despite this bearish forecast, a close above $30,000 would imply that the long-term trend remains bullish.
In this case, BTC price could head towards the next major resistance at $35,000.
You can see the token price here.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should do their research carefully before making a decision. We are not responsible for your investment decisions.
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