Technical analysis of Bitcoin market: where will it fall?

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Technical analysis of Bitcoin market: where will it fall?

Bitcoin price appears to be forming a downward trend after confirming a reversal pattern, and technical indicators are also showing signs of this.

Key points:

Bitcoin price has recently formed a head and shoulders bottom pattern on the short-term timeframe, suggesting that the recent rally may be coming to an end.

The price broke the neckline support level, which then became resistance on a secondary test.

This is a sure sign that more losses are likely to follow, so now is the time to watch for nearby turning points and next target profit zones.

Bitcoin price appears to be forming a downward trend after confirming a reversal pattern, and technical indicators are also showing signs of this.

Technical indicators

The 100-day simple moving average (SMA) is below the 200 SMA, so a sell-off could be imminent. Moreover, the 100 SMA presents a dynamic resistance zone as it coincides with the broken neckline of the head and shoulders bottom at $655.

Bitcoin price is still stagnant near the short-term support of $650, but if the price breaks down below this level, it is likely to attract more sellers to join the fray. The Stochastic Index is still moving south, so the price may follow suit and may aim for a low of $630.

But remember, Stochastic is also approaching the oversold zone, so the range may change, giving the profit-taking sellers a break. If the bullish pressure is strong enough, then a strong rebound is possible.

Market Dynamics

Data on the US economy was much better than expected, which increased demand for the dollar against other assets and made traders more expecting optimistic statements from Federal Reserve policymakers in today's FOMC report, so the desire for rate hikes this year may continue again.

Besides, the fall in commodity prices has also stirred some risk aversion, which also supports the stability of the US dollar. The expectation of inventory increase mainly depends on crude oil prices, although it may change based on the release of data from the US Energy Information Administration, which may drop by 2.1 million barrels, thus alleviating the fear of oversupply.

Regardless, keep an eye on other factors that could have a volatile impact on Bitcoin prices during the FOMC statement, as any bearish comments leading to a weaker dollar could drive a rally in Bitcoin as a result.