Bitcoin (BTC) started the weekend with a slightly more positive mood after a mostly bearish week, seeing some price recovery. However, a technical analyst warns of more downside potential for the leading cryptocurrency, looking at the hourly chart.
Ben Walter, highly regarded analyst TradingView, shared two recent Bitcoin price analyses that looked at key levels and chart patterns. In both analyses, Walter concluded that BTC could still see significantly lower prices against the dollar, targeting below $54,000.
At the time of writing, Bitcoin is trading at $59,450, having recovered from a dip to $50,000 in early August. Despite the recovery from the dip, BTC is still trading with a loss of 6.77% over the past 30 days, below the key psychological level of $60,000.
Bitcoin’s Key Support Level Briefly Broken
On August 15, Walter shared his first analysis of Bitcoin and Ethereum (ETH), tracking key support levels for both cryptocurrencies. The analyst explained that $58,000 BTC is a key level to watch, warning of a potential drop if it is broken.
Indeed, Bitcoin lost support and fell to $56,000, but then immediately recovered above that level.
BTC’s Descending Expanding Wedge Points to ‘Further Downside’
A day later, the analyst shared another insight, highlighting a “falling expanding wedge” chart pattern that points to more downside potential. According to Ben Walter, the pattern is “characterized by two diverging trend lines and price making lower highs and lower lows.”
Moreover, the trader explained that a descending expanding wedge is usually a bullish sign that is likely to break out to the upside. However, this forecast is only valid when the asset is showing decreasing volume within a downtrend.
The current Bitcoin situation here plays out the opposite scenario, showing increasing volume weighted to the sell side. This indicates greater market interest in selling BTC at lower lows and a lack of interest in buying at higher highs – suggesting that Bitcoin could break out of this pattern to the downside, yielding significant losses.
Therefore, the analyst warns of a potential rally above $60,000, which would create a bull trap at the pattern resistance. A sharp drop in price is likely to follow this bull trap, testing the support of the descending expanding wedge again. The loss of this support would be extremely bearish for Bitcoin in the next few days, potentially visiting local bottoms.
Traders should be cautious and expect high short-term volatility while closely monitoring BTC price action.
Disclaimer: The content of this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
