Bitcoin has spent the better part of the past several weeks delivering a painful lesson to bulls. The largest cryptocurrency by market capitalization has shed more than 22% over the past month, slicing through support levels that many traders had considered established.
Bitcoin is still trapped below a descending trendline, and the current structure still favors sellers unless price can reclaim important resistance levels. However, technical analysis projection leaves room for a recovery move if Bitcoin breaks out of the bearish trend and starts building momentum above confirmation levels.
Bitcoin Inside A Bearish 4-Hour Structure
Bitcoin’s 4-hour chart shows price action moving inside a bearish structure, with lower highs and lower lows forming under a descending resistance line since the swing high above $82,800 in May. The rejection from that swing high has now pushed Bitcoin below a weak low / liquidity sweep at $66,000, and the chart’s break of structure and change of character labels show how control moved from buyers to sellers.
Related Reading
The bullish case does not come from a confirmed reaction at $66,000 but from the possibility that Bitcoin can reclaim lost structure after the recent breakdown. However, if Bitcoin begins to push back above the nearby confirmation area around $66,948 and then breaks above the descending trendline, the move could open the way for a climb into the higher resistance levels shown in the 4-hour chart below.
Bitcoin 4-Hour Chart. Source: TradingView
The Targets Stacked Above And What Each One Means
A trendline break, confirmed alongside a strong 4-hour close above the descending structure, would not immediately resolve the current bearish mood Bitcoin is trading in. It would, however, initiate a move to resistance price levels that increasingly change the momentum in the favor of Bitcoin bulls.
A stronger bullish signal would come only if Bitcoin pushes back above the descending trendline. The technical chart places this descending trendline around $71,495, and this is the level that could decide whether the recovery has enough strength to continue. A rejection below that price area would keep the bearish structure in place, but a clean break above it would challenge the current trend and allow bulls to trend higher price levels.
Related Reading
The next level is around $75,952. This is an intermediate resistance and breakdown level, which means it could become the next major test if Bitcoin breaks the resistance trendline. The highest and most significant target on the current structure is around $79,453, where the major resistance and bearish control level is located.
Above that, the premium supply zone and institutional sell area stretches from approximately $77,000 to just above $82,000. Therefore, according to the projection drawn on the chart, a confirmed break of the current bear trend could send Bitcoin back into its May high of $82,000, where it could face another test of resistance.
Featured image created with Dall.E, chart from Tradingview.com