In the bigger picture, bitcoin is forming an expanding wedge pattern – a common technical pattern in the forex markets. The price has touched the upper trend line twice at the $65K and $69K levels.
On the other hand, the crash of the LUNA-UST ecosystem has acted as a catalyst for the current bearish momentum, which has seen the price of bitcoin drop to $26K, touching a downtrend for the third time.
technical analysis
By Shayan
daily chart
The lower trendline of the wedge has been the primary support level for bitcoin during the recent cycle and is expected to support the price in May 2021. The 50-day moving average line and the $35K area will potentially act as important resistance levels if the market rebounds from the lower trendline.
However, if the trendline fails to sustain the price, support levels for Bitcoin will lie around the $24K and $20K in-demand areas.
4 hour chart
Bitcoin has entered a range phase making a similar high. On the other hand, the cryptocurrency turned bullish and entered a higher higher price action pattern (yellow pointer), taking out all the liquidity above, which can be interpreted as a clear bull trap.
In the medium term, BTC is expected to remain in this slack range between $29K and $32K, with substantial volatility due to futures market liquidations.
Meanwhile, the cryptocurrency is moving inside a descending channel and rejected from the upper trendline. In the event of a breakout above the indicated range and the upper trendline of the channel, a bullish rally would be imminent. In that case, $37K will be an important resistance level.
onchain analysis
By Shayan
As shown in the chart, during the consolidation phases, the market often stops buying/selling at all retailers’ futures markets, resulting in massive liquidations in both directions.
Bitcoin established a higher pattern (yellow pointer), a clear bull trap, followed by a market correction that eliminated many long positions. Other than that, the same pattern is visible right now. The market has seen a lot of volatility over the past three days, resulting in long liquidations of large volumes.
When the market goes through extreme volatility and enters a consolidation period, these moves are inevitable. During these market phases, risk management is essential.
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Cryptocurrency charts by TradingView.
