BTC Technical Analysis: Expect One More Drop Before Trendline Test – Downtrend Meets Major Ascending Support

The Bitcoin price is approaching the convergence of the downtrend and the major ascending trendline. One of these two will have to be broken. That said, a short-term correction is also about to kick in. This week could be when the next major move begins.

Next reversal leg coming due

Source: TradingView

The $BTC price is currently up against the $89,500 horizontal resistance level, with the main downtrend line just above. However, with the 4-hour Stochastic RSI indicators topped out, and the same with the 8-hour and 12-hour, a reversal phase is becoming due.

There is always the possibility that the Stochastic RSI indicators lines continue at the top for a period of time, and that this scenario could help the bulls push the price through the resistance and also the downtrend, but the next down leg is still coming, and this needs to be factored in by traders.

As can be seen in the chart, the space for manoeuvre is getting tighter. By Friday at the latest, the $BTC price will either break the downtrend, or it will drop through the major ascending trendline. Whichever direction $BTC takes could set the price direction for the next weeks and perhaps months.

Major price explosion approaching?

Source: TradingView

The daily chart enables one to get more of a sense of how close the price is to breaking one way or the other. There is a good amount of resistance where the $BTC price is now, but this could also certainly be said about the supports below. 

Could there be a major price explosion once the price is forced out in one direction or the other? Possibly, but the price would be expected to come back and confirm the breakout first.

The Relative Strength Index (RSI) at the bottom of the chart looks interesting. It can be observed that the indicator line is poking its head through the downtrend line. If this is still the case at the end of today, this would suggest not just a breakout for the RSI, but this could also signal a breakout in the price action above.

A bullish breakout could take price back to 8-year trendline

Source: TradingView

The weekly chart is looking very exciting. A breakout of the third huge pattern is soon to take place. The fact that the indicator lines in the weekly Stochastic RSI are perhaps looking to cross back up again, would suggest that the breakout could be to the upside.

When the previous two patterns broke, the price increase amounted to 59% and 50% respectively. This kind of gain again would take the current $BTC price back to the 8-year ascending trendline above. 

If this happened, could the $BTC price break through? There is always a possibility, but one would have to consider how over-bought the price might be by the time it got back there. Much would depend on how fast the price could rise.

Also taking into consideration the bear case, a descent down beyond the major ascending trendline could see the price fall to the major horizontal support. Given that this is the top of the previous bull market in 2021, this would wipe out all the gains since then. Much is riding on this next move.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.