Bitcoin Temporary Relief as Bears Take a Breather – Next Leg Down Loading?

Since hitting a new low at around $59,100, the $BTC price has been trading sideways and slightly upward - the typical trajectory of a bear flag. This could mean some relief in the short term, but if the bear flag plays out, stand by for another leg down to what could be a sub-$50K Bitcoin. 

Bear flag rally back to $66K?

Source: TradingView

The 4-hour time frame reveals that the $BTC price is battling to get above a combination of the $62,800 horizontal resistance and the 50 SMA. If the bulls are successful, some more resistance needs to be overcome at $64K and then the path should be open to the major resistance at $66K, which could coincide with the top of this potential bear flag.

If the market turns down from here, the combination of the bull market trendline and the $60K horizontal level should provide plenty of support.

Eventual test of the bear market trendline

Source: TradingView

Saying that a chart looks crystal clear, as far as where the price is going next, is nearly always a mistake given the perversity of the market. Setups look as though they cannot fail, yet fail they do.

That said, the above daily chart for the $BTC price does look very clear cut. In fact, one could say that this entire bear market has pretty much gone to plan so far. Bear flags have played out perfectly, and if the price can come down and test and confirm the bear market trendline as support, that could be the final check box (except for time duration) for the completion of this bear market.

As already mentioned, if the bulls are able to push the price to the top of the very small bear flag, the $66K level would contribute to a likely rejection, whereupon the price could force its way down through the bull market trendline to that potential key test of the bear market trendline.

A bounce then back to support: will it hold next time?

Source: TradingView

Here in the weekly time frame things also look relatively clear. The price came down very quickly from above $80K and hit the $60K horizontal support, together with the bull market trendline and the 200-week SMA. Of course a bounce was going to be likely. 

That bounce is probably going to top out at $66K, and then the only uncertainty is whether the aforementioned supports will hold again, or whether the price will break down through them.

All the while, the weekly Stochastic RSI indicator lines are coming down fast. Another 3 weeks or so could see the indicator lines hit the bottom and start their bounce back to the upside.

The end of the bear is perhaps now in sight. That said, does the market still have a curve ball to throw that could bring the $BTC price a lot further down than everyone expects?

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.