Bitcoin price action is raising concerns after a failed attempt to break through critical resistance levels, with bearish signs emerging now. According to an analysis shared on TradingView by analyst RLinda, Bitcoin could be on track to reverse last week’s gains and correct sharply due to the formation of a bearish engulfing pattern.
Failure of momentum above $69,000 marks bearish reversal for Bitcoin
RLinda’s Review of Bitcoin’s price trajectory is based on a new bearish dipping candlestick pattern that is developing on the daily candlestick time frame. Last week, Bitcoin experienced a remarkable recovery that brought the cryptocurrency to a strong buy zone about $68,900.
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Despite the bullish momentum, Bitcoin bulls were unable to push the price through the $69,000 resistance zone, encountering repeated rejections as the cryptocurrency advanced towards that level.
RLinda’s analysis noted that this inability to move higher has led to the formation of a bearish dipping pattern in the last three daily candle bars, which could be a sign that sellers are regaining control.
The bearish absorption pattern, where the last candle completely engulfs the previous day’s candle, is a strong reversal signal that suggests the upward momentum has run out. This pattern, combined with the failure to clear the $69,000 zone, indicates that Bitcoin may be facing a deeper correction.
RLinda goes further to highlight that the recent rally appears to have been a false breakout of the descending resistance trendline that has been in place since Bitcoin reached its all-time high of $73,737. The descending trendline has acted as a ceiling for Bitcoin price rallies since March. While last week’s rally initially appeared to break it, the subsequent rejection suggests the break was not sustainable.
Given this, the analyst notes that Bitcoin has now returned to a consolidation phase just below this trend line. As Bitcoin continues to consolidate, the risk of a deeper correction increases.
How far can a Bitcoin price correction go?
Looking ahead, RLinda predicts a possible correction in the price of Bitcoin, with the first decline target set at around $65,000. If this level does not hold, further corrections could see Bitcoin fall to $61,000, $58,000 and possibly even $57,000.
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However, this pessimistic perspective It’s not set in stone. RLinda adds that the bearish structure could be invalidated if Bitcoin manages to surpass $69,400. A break above would guarantee upside momentum and a sustained break above the descending triangle.
At the time of writing, Bitcoin is trading at $66,670, marking a 0.6% drop in the last 24 hours. The current price action is in line with RLinda’s consolidation forecast below the descending resistance trendline.
Meanwhile, the next few days may determine how much Bitcoin closes October (until October) in the green zone. Resistance levels to watch are $66,500 and $65,000, while support levels to watch are $68,400, $69,400 and $71,500.
Featured image created with Dall.E, chart from Tradingview.com