The cryptocurrency market is once again in turmoil as Bitcoin’s price action raises alarms among traders and investors. Following a failed attempt to surpass crucial resistance levels, Bitcoin appears to be signaling a potential bearish reversal. According to insights from the analyst RLinda on TradingView, the digital currency might be poised to undo its recent gains and undergo a significant correction due to the emergence of a bearish engulfing pattern.
Failed Push Above $69,000 Marks Bearish Reversal For Bitcoin
RLinda’s detailed analysis of Bitcoin’s price trajectory is grounded in the development of a new bearish engulfment candlestick pattern on the daily chart. Last week’s trading saw Bitcoin embark on an impressive rally, propelling the digital asset into a robust buying zone near $68,900. Despite this bullish momentum, the bulls struggled to overcome the $69,000 resistance level, encountering multiple rejections as they approached this critical threshold.
Understanding the Bearish Engulfment Pattern
The inability to break through the resistance zone has resulted in the formation of a bearish engulfment pattern over the past three days. This pattern, where the most recent candle completely engulfs the previous day’s candle, is considered a strong reversal signal, indicating that upward momentum may have reached its limit. The combination of this pattern with the failed attempt to clear the $69,000 level suggests that Bitcoin might be on the brink of a deeper correction.
RLinda further emphasizes that the recent rally might have been a false breakout from a descending resistance trendline, which has constrained Bitcoin’s price rallies since its all-time high of $73,737. Although last week’s surge initially seemed to breach this trendline, the subsequent rejection indicates that the breakout was not sustainable. Consequently, Bitcoin has reverted to a consolidation phase just below this trendline, heightening the risk of a more substantial correction.
How Far Can A Bitcoin Price Correction Go?
Looking ahead, RLinda forecasts a potential correction in Bitcoin’s price, with the initial target for a decline set around $65,000. Should this level fail to hold, further corrections could drive Bitcoin’s price down to $61,000, $58,000, and possibly as low as $57,000. However, it’s important to note that this bearish outlook is not set in stone.
Potential for Bullish Momentum
RLinda also points out that the bearish structure could be invalidated if Bitcoin manages to break above $69,400. Achieving this would secure bullish momentum and potentially lead to a sustained breakout above the descending trendline. As of now, Bitcoin is trading at $66,670, reflecting a 0.6% decline in the past 24 hours, aligning with RLinda’s prediction of consolidation below the descending resistance trendline.
In the coming days, the market will be closely watching how Bitcoin concludes October, often referred to as “Uptober.” Key resistance levels to monitor include $66,500 and $65,000, while crucial support levels are at $68,400, $69,400, and $71,500.
The unfolding events in the Bitcoin market offer a dynamic narrative that traders and investors should keep an eye on. Whether the digital currency will succumb to a bearish correction or find renewed strength to break past resistance levels remains to be seen. As always, staying informed and vigilant is key in the ever-evolving world of cryptocurrency.
