Bitcoin price is barely holding onto support at $ 30,000 and could soon be lost for some time if a pattern that has shrunk the cryptocurrency down to size confirms it.
The pattern itself has proven dangerous to Bitcoin in the past and is now appearing to be collapsing. Here’s a look at how past patterns played out and what goals are down when the retrograde pattern is in place.
Descending triangle: The most dangerous technical pattern in Bitcoin
Technical indicators such as the MACD and the Average Directional Index have been signaling a trend reversal in the daily timeframe for more than a week.
During the three-week price movement in Bitcoin since the current high of 2021 at 42,000 US dollars, the leading cryptocurrency by market capitalization has bled out over 10,000 US dollars and could be exposed to further downside risk.
Related reading | The bear trend has caught on with Bitcoin for the first time since October 2020
The resulting consolidation below the first major resistance level since $ 20,000 may have formed a descending triangle pattern – a chart pattern that has been devastating to Bitcoin bulls in the past.
The top cryptocurrency may break out of a descending triangle | together source: BTCUSD on TradingView.com
Descending triangles are typically bearish patterns that cause a sharp downward movement once the lower horizontal support line is broken.
That violation could take place today, and a deeper dive is possible if the pattern is confirmed to be valid.
How previous instances of the pattern collapsing that affected crypto
Anyone who has invested in Bitcoin since 2017 should be more familiar with the descending triangle pattern than they would like.
It was the pattern that hit the cryptocurrency at $ 3,200 after trading within the structure for most of 2018.
Past descending triangles have always hit their respective target Source: BTCUSD on TradingView.com
Another descending triangle formed at the top of the 2019 rally. Both cases of a descending triangle have hit their respective targets based on the measured movement within the pattern itself.
Descending triangle targets are found by taking the highest point of the triangle and measuring to the horizontal baseline support. Ascending and symmetrical triangles are measured in a similar way.
The percentage distance traveled within the pattern is typically the distance to the target of the formation after the breakout.
Related reading | Evening Star: Reversal patterns could drown Bitcoin price action for weeks
If the current descending triangle does the same and achieves its target, the measured movement should result in a drop to around $ 23,000.
Bulls will have to defend levels to resume the uptrend, or bears have a chance to lower prices further, possibly back into a downtrend, as was the case in 2019. Where is Bitcoin going next?
Featured image from deposit photos, charts from TradingView.com