Bitcoin (BTC) bulls should look for a cover, at least as far as chart technicals are concerned.
The flagship cryptocurrency continued its price declines into the new weekly session, hitting $32,105 ahead of the London opening bell following an approximately 10% intraday drop. In doing so, it raised the prospect of retesting its quarter-to-date low of $30,000 for either a bearish breakdown or a bullish pullback.
But as traders grapple with the ongoing medium-term bias conflict in the Bitcoin market, one classic technical pattern has surfaced to boost a bearish outlook.
The cup has turned
Spotted by Keith Wareing, an independent market analyst, the so-called “Inverse Cup and Handle” structure points to an extended downside price correction ahead in the Bitcoin market. In detail, the pattern develops when an asset forms a large crescent shape as it rallies higher and corrects lower, followed by a less extreme, upward rebound.
Traders look at the Inverse Cup and Handle pattern as their cue to open short positions to target deeper levels. The most extreme bearish target, in such a case, is determined by measuring the distance between the cup’s top and the pattern’s breakout level.
Meanwhile, traders typically spot breakout levels when the price breaks out from the handle pattern to the downside while accompanied by higher volumes.
Based on the chart provided by Wareing, Bitcoin’s recent price action — ranging from its pump to nearly $65,000 followed by a dump to $30,000 and a retracement to $40,000 — almost checks all the boxes that confirm the presence of an Inverse Cup and Handle structure.
Except, the Bitcoin price still awaits a bearish breakout.
Back in play pic.twitter.com/aqLVazTK8J
— Keith Wareing (@officiallykeith) June 21, 2021
The depressive Bitcoin setup appeared as traders…