- The formation of a rising wedge pattern in an up trending market signifies an impending reversal.
- Bitcoin slide likely to find solace at $5,260 – $5,280 support congestion and lead to a correction past $5,300.
The short-term outlook for Bitcoin has a bearish bias. The dwindling bullish momentum displayed on Monday follows the formation of two bearish signals. The first being the double-top pattern that formed when BTC/USD brief surge failed to make headway above $5,340. As it has been discussed before, this pattern indicates a bearish reversal from a bullish momentum like the one seen on the chart below.
The reaction to the pattern is seeing Bitcoin price slash most the gains recorded on Monday. The weekend trading saw Bitcoin bulls battered from the region that formed the left top of the pattern. While the short-term support at $5,240 caved in, the buyers found solace at $5,220, in turn, halting the declines.
However, an upward movement commenced on Monday as Bitcoin fought various hurdles at $5,240, $5,260 and at the 100 simple moving average (SMA) 15-minutes. On stepping above 100 SMA barrier, the price gained more strength encouraging the bulls to take more positions. BTC/USD brushed shoulders with $5,340 before the trend reversed.
Rising Wedge Pattern Breakdown
The formation of a rising wedge pattern in an up trending market signifies an impending reversal. Therefore, traders can expect Bitcoin to correct lower and break below the rising wedge pattern support. The impending breakdown will follow the ongoing bearish reaction to the double top pattern coupled with the rising wedge pattern support break.
While Bitcoin is likely to explore the areas below $5,300, the 100 SMA 15’ is positioned to offer support and is a key reversal point to look out for. The region between $5,260 and $5,280 is a positive region for Bitcoin price and any correction into this range will witness an increase in the buying entries. Therefore, declines to this region will spark more growth above $5,300, besides BTC/USD bulls have eyes glued on $5,400.
Bitcoin Key Technical Indicators
RSI 15’: Defends 40 support and revamps direction upwards.
MACD 15’: Divergence increases towards the negative zone.
100 SMA 15’: $5,285.04
Support 1: $5,260 – $5,280
Support 2: $5,200
Resistance 1: $5,320
Resistance 2: $5,340
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