Bitcoin Price Forecast: Falls Below Key Moving Averages, Bearish Signs Emerge

Bitcoin shows clear signs of weakening today as it falls below the 20-Day MA and an internal uptrend line. This follows a seven day relatively sideways move that tested a resistance zone with a high of 71,790. Demand was not strong enough to take it higher out of the range and now the sellers are back in charge. Next stop looks to be a test of support around the 50-Day MA, which is currently at 62,800. That lines up closely with the next lower internal uptrend line.

Lower Swing High in Place

Note that today’s decline has confirmed a lower swing high for Bitcoin. In addition, a weekly bearish reversal triggered, as last week’s low was broken. A bearish divergence in the relative strength index momentum oscillator (RSI) has been in place since just before the recent 73,836 peak was reached. Today that oscillator is set to break below the prior swing low as bearish momentum intensifies.

Two Likely Scenarios Unfolding

It looks like there are two possible scenarios now unfolding. Since there is a second lower swing high, a double top is a possibility. However, to trigger the 50-Day MA and next lower internal uptrend would need to be busted to the downside. The most recent swing low support at 60,771 is the neckline level and a drop below it will trigger a breakdown from the double top. If this scenario unfolds Bitcoin could be in a correction for months as it would be below the 50-Day MA.

Potential Bull Pennant Setting Up

Another scenario that may unfold is where a bullish pennant trend continuation pattern is established. The lower boundary of the pattern would be reached near the internal uptrend line and the 50-Day line. It is proceeded by a pole. The pole is the sharp rally that occurred prior to the pennant. Since it is a trend continuation pattern an upside breakout would be anticipated. Which scenario is unfolding should be determined relatively soon as the 50-Day line and trendline could be reached in days. Further, if Bitcoin continues to trade inside the pattern before hitting the 50-Day line it would be leaning towards the pennant scenario.

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