Ahead of the US producer price index (PPI) release, and the Federal Reserve Chairman’s speech on Thursday, Bitcoin (BTC) has been forming a bearish M chart pattern. Could this pattern play out and send Bitcoin back down to $96,000?
Important data releases and Fed Powell speech keenly awaited
Stock markets are holding their breath as important data is due to be released on Thursday. The main focus here is on the US producer price index (PPI) release, and unemployment claims. Fed Chairman Jerome Powell’s speech is also keenly anticipated. This might give clues as to any potential adjustments in interest rate policy.
M chart pattern danger
Source: TradingView
As can be seen in the 4-hour chart above, the $BTC price is approaching a critical point. An M pattern is still forming, and if the price should get down to the neckline at $100,760, break below, confirm, and continue down, the measured move could take the price down to just below $96,000, which would coincide with the top of the bull flag the price recently escaped from, plus some very strong horizontal support.
It should be noted that the Stochastic RSI for the 4-hour time frame has the indicators approaching the bottom. This is the case for the 8-hour, and also soon the case for the 12-hour. When these turn back up, the price momentum should send $BTC back up, but it remains to be seen just how strongly or quickly this could occur.
Bull pennant or flag?
Source: TradingView
This is an early thesis, but could the price action even be drawing a bull flag, or a bull pennant? As far as the pennant goes, this could be disproved very quickly if the price falls below the dashed line which marks the pennant’s bottom trendline. If the bull flag thesis plays out, the price could still go quite a bit lower - possibly down to the $98,000 level in order to make another touch of the bottom trendline of this potential flag.
A logical correction for $BTC
Source: TradingView
Zooming right out into the weekly time frame, it can be seen that the recent small correction was very logical. This takes the price back down to good support levels from where the next rally can take the price much higher.
At the bottom of the chart, the Relative Strength Index shows that the indicator is copying the price action by dipping back down slightly. That said, this brings it down to some good support structure at 62.60 where a bounce could take place.
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.
