Bitcoin’s two-month consolidation pattern is forming a bearish posture following a fourth consecutive lower high.
After reaching a yearly high of $14,000 in June, Bitcoin has slumped by more than 25% to around $10,000.
Since then, it has failed three times to achieve a new high, seeing rejections at $13,200, $12,350, and $10,950.
It is now currently grinding along the $10,000 level of support, which has been respected on numerous occasions over the past month.
A breakdown in price from this level would see downside targets emerge at $9,450 and $8,880, which was a point of resistance prior to the breakout in June.
The 100 EMA on the daily chart is currently at $9,800. This could be a point at which Bitcoin bounces as it did so before on August 15.
In order to trigger a bullish reversal, Bitcoin must rally above the $11,000 level as it would take out the upper side of the symmetrical triangle while also creating a higher high above the previous point of rejection at $10,950.
The daily stochastics are currently poised in a neutral zone between 52 and 59. A slump in price from here would almost certainly send it down below 20.
The last time the daily stochastics fell below 20 was on August 30 when Bitcoin dropped to $9,350. The time before that was on July 15 when price fell 30% from $13,200 to $9,150.
Currently, while there is potential for Bitcoin to bounce in the coming days back to the $10,500 region, the odds seem stacked in favour of the bears, with a test of the 200 EMA on the daily chart at $8,590 becoming increasingly likely.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.