Bitcoin (BTC) has rebounded by more than 25% after bottoming out at $30,000 during the May 19 crash. But the cryptocurrency continues to tread ahead under the possibility of facing another period of strong sell-offs owing to a classic technical indicator pattern.
Bitcoin price in a ‘Bearish Pennant’
Dubbed as Bearish Pennant, the pattern forms when an asset consolidates after a strong move downward and forms a small symmetrical triangle-like price range. It breaks below the range support and continues moving lower. Traders usually estimate the size of the negative breakout move by measuring the height of the earlier move.
Bitcoin is currently trading inside a similar bearish pennant structure, fluctuating sideways as it forms a sequence of lower highs and higher lows. Meanwhile, its consolidation structure precedes a massive move downhill to around $20,000. Therefore, if the BTC/USD rate breaks below the pennant structure, accompanied by rising trade volumes, its likelihood of crashing by almost $20,000 is high.
The bearish outlook also borrows cues