Income Machine and Classic Technical Indicator Predict Bitcoin Price to Bottom Out at $16,000

Income Machine and Classic Technical Indicator Predict Bitcoin Price to Bottom Out at $16,000

News

After a massive drop from $65,000 to $30,000 during the crash of May, Income Machine has predicted about Bitcoin price which has surged more than 25%. But the cryptocurrency continues to face the possibility of another selloff frenzy. Experts suggest a classic technical indicator pattern may explain the trend.

Bitcoin Price Trading in a Bearish Pennant Structure

A “bearish pennant” pattern is a downside continuation structure. Resembling a symmetrical triangle-like price range, the pattern forms when an asset consolidates after a significant move downwards. At this point, it continues to move lower, breaking the range support. Traders use the height of the earlier move to measure the negative breakout move.

At present, Bitcoin appears to be trading in the bearish pennant territory. Its fluctuating prices are forming a sequence of lower highs and higher lows. Moreover, the cryptocurrency risks crashing by almost $20,000, if the BTC/USD exchange rate breaks lower than the pennant structure, and the development is accompanied by an increase in trade volumes.

The bearish prospects are based on a trail of hints left by Bitcoin’s recent bounce. It is important to note that the cost of 1 BTC declined by more than 50% on May 19. This was followed by a 30% recovery in value.

Income Machine Foresees a “dead cat bounce” scenario for Bitcoin

Market analytics service Income Machine warned investors about the emergence of a “dead cat bounce” scenario, in which impending rallies in BTC/USD could be limited by the pressure to sell around May 26 highs (the $39,000–$41,000 range). Traders are advised to exit their bullish position close to the $40,000 mark.

Furthermore, Income Machine observed that if Bitcoin fails to hold $30,000 as support, its price could nosedive to $16,200 — a value that matches the bearish pennant target. The $16,200 price was selected for its historical relevance as support during November-December 2020 period.

However, the analytics firm is prepared to roll back its analysis in the event of an upward swing. The analysts added:

“Conversely, an upside break of the May 26 highs would cause us to reverse our analysis and adopt a more bullish outlook for BTC-USD”.

Pankaj Balani, the chief executive and co-founder of crypto derivatives exchange Delta, expressed a bearish outlook for Bitcoin in case its price closes lower than $34,000. But the UBS official was conservative about the downward target, citing $28,000 as the year’s lowest level.

“Traders would be keenly watching these levels before taking any decisive action. That said, the risk to the Bulls remains higher compared to that of Bears, as longer-term price action is in a downward direction.”

Bullish Prospects Could Break the Bitcoin’s Bearish Pennant

Balani appeared optimistic regarding the demand in Bitcoin’s current price range. He noted that an upward movement in the range could break the bearish pennant — which he views as a symmetrical triangle — to the upside. He added, “BTC is forming a classic symmetric triangle and any breakout/breakdown will lead to a significant price move”.

“If BTC breaks out of $40K conclusively, a move to $45K can be expected.”

Binance

Source link

Latest Crypto News


Popular Links

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments