At a quick glance, bitcoin doesn’t look good as we see in this line chart, it forms a bearish head and shoulders. When this pattern occurs, we normally expect the price to fall the same distance as the head to its neckline.
Here are Bitcoin's significant price levels. We are currently sitting at 31K level somewhere in between 0.5 and .618 level at 40k and 27k respectively. The 0.786 level is at 117-19k level which coincides with bitcoin peak on December 2017. This means it is a very significant support level that is likely an area where most traders will look for a bounce play.
As we zoom in with the 4Hour Chart, we could see the current price level having been tested many times as it bounced in the 30k level and at a technical analysis standpoint, a support that has been tested many times will likely break. A diagonal line can also be drawn on the resistance which would form a descending triangle with the support. The apex of this triangle is on 05 August which means that a little less than 15 days, we are expecting bitcoin to drop lower. Potentially we are looking at 17-19K level as the floor.
While we are expecting bitcoin price to go lower, as early as now, we could see a potential bullish divergence signal forming as bitcoin will approach 17-19K level. This is a continuation signal of the previous bullish move which could send bitcoin price higher than its 60K peak.
This signal is very similar to what we saw in bitcoin bottom of November 2018 at 3K level. This signal propelled bitcoin price from 3K level to 60K level in a two year bull market. A similar pattern also occurred in February 2015 which propelled drove the price from 191 dollars to 19K peak of December 2017. With these premise, a bullish divergence signal at 17K-19 level could potentially drive bitcoin price way higher than April 2021 peak of 61K.
I have made a video on this analysis in Tagalog uploaded in youtube in this link.
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