BTC: Bears & Their Flags
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Since giving up the 50D SMA over the weekend and bouncing off a local low of 51K, the bulls have been struggling to turn the ship around and regain any kind of meaningful ground. As we can see in the 4H chart provided above, BTC has made a valiant effort in closing back above the 50D SMA, but with little luck.
To make matters worse for the bulls, price action over the past few days seems to suggest a bear flag is forming. As the name implies, a bear flag is a technical pattern that provides an extension/continuation to an already existing downtrend. As such, one could expect BTC to break to the downside sometime between now and April 30 (the flag's apex).
Even if BTC continues to bounce between the flag's trendlines and eventually breaks through the flag's support (~$53,300), it's not exactly clear where BTC will then bottom out at. But of the limited historical price action that exists, the case could be made that BTC will find support at 51K. If said level fails to hold, a close eye ought to be kept on the $46,300 - $49,500K region. This is a range that we saw BTC spend a decent amount of time inside of in late February and early March before trending higher. Thus, it's most certainly not out of the realm of possibilities that BTC revisits this range yet again.
Do keep in mind that in prior bull market cycles, BTC has typically corrected anywhere from -30% to -40%. With BTC having yet to correct that severely this market cycle, we should consider what kind of correction BTC will have incurred if/when it revisits any of the aforementioned levels of support:
Since giving up the 50D SMA over the weekend and bouncing off a local low of 51K, the bulls have been struggling to turn the ship around and regain any kind of meaningful ground. As we can see in the 4H chart provided above, BTC has made a valiant effort in closing back above the 50D SMA, but with little luck.
To make matters worse for the bulls, price action over the past few days seems to suggest a bear flag is forming. As the name implies, a bear flag is a technical pattern that provides an extension/continuation to an already existing downtrend. As such, one could expect BTC to break to the downside sometime between now and April 30 (the flag's apex).
Even if BTC continues to bounce between the flag's trendlines and eventually breaks through the flag's support (~$53,300), it's not exactly clear where BTC will then bottom out at. But of the limited historical price action that exists, the case could be made that BTC will find support at 51K. If said level fails to hold, a close eye ought to be kept on the $46,300 - $49,500K region. This is a range that we saw BTC spend a decent amount of time inside of in late February and early March before trending higher. Thus, it's most certainly not out of the realm of possibilities that BTC revisits this range yet again.
Do keep in mind that in prior bull market cycles, BTC has typically corrected anywhere from -30% to -40%. With BTC having yet to correct that severely this market cycle, we should consider what kind of correction BTC will have incurred if/when it revisits any of the aforementioned levels of support:
- A move down to $51,000 would imply a -21.5% correction from BTC's all-time high of 65K.
- A move down to $49,500 would imply a -24% correction from BTC's all-time high of 65K.
- A move down to $46,300 would imply a -29% correction from BTC's all-time high of 65K.
- For BTC to have corrected -40% from its all-time high, BTC will have to revisit 39K.
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