Bitcoin’s meteoric surge had everyone believe that it was the start of the bull rally; however, that rally seems to have exhausted the bulls as the price is stuck in a sideways movement.
The price of Bitcoin is stuck in a sideways movement without any massive dips or surges for over five days, indicating the exhaustion of the bull rally. There is a formation of an ascending channel and the breakout of this channel is bearish.
The breakout from this channel, if similar to the previous pattern, could suggest a drop of approximately 10%, which could take the price of Bitcoin to $7,100. However, the drop could be stopped by subsequent resistances at $7,542 and $7,238.
Long Term Analysis
The daily time frame showed a breakout of the rising wedge, which resulted in a total drop of ~15%. The Relative Strength Index on this time frame shows that it has breached a four-month-old resistance and is headed down, which is a bearish signal.
The weekly time frame for Bitcoin shows the formation of a doji candle, indicating a reversal in the trend. The candle, after the doji, is a red weekly candle that was formed after 5 consecutive weeks of green candles. If the candle after the doji is a red candle, this indicates a reversal in trend. The support for Bitcoin on a weekly time frame can be seen at $5,880.