Bitcoin price barely holding support at USD 30,000 and it could soon be lost for some time to come, as a pattern that the cryptocurrency has tailor-made confirms.
The pattern itself has proven dangerous for Bitcoin in the past and now appears to be breaking down. This is how past patterns played out, and the targets are down if the bearish pattern is valid.
Descending triangle: the most dangerous technical pattern in Bitcoin
Technical indicators such as the MACD and Average Directional Index have signaled a change in trend for over a week now on daily time frames.
During the now three weeks of price action in Bitcoin since its current peak at $ 42,000 in 2021, the leading cryptocurrency by market cap has fallen over $ 10,000 and could be with the risk of more downside.
The resulting consolidation below the first major resistance level since USD 20,000 may have a descending triangle pattern – a chart pattern that has been devastating to Bitcoin bulls in the past.
The top cryptocurrency is potentially breaking down from a descending triangle | Source: BTCUSD on TradingView.com
Descending triangles are typically bearish patterns, resulting in a strong downward movement as soon as the bottom horizontal support line is broken.
That break may be taking place today, and a deeper dive is possible if the pattern confirms as valid.
How past instances of pattern truncation affected Crypto
Anyone who has invested in Bitcoin since 2017 should be more familiar with the descending triangle pattern than they would like to be.
It was the pattern that took the cryptocurrency to its low at $ 3,200 after trading the structure for almost all of 2018.
Past descending triangles have always hit their respective target | Source: BTCUSD on TradingView.com
Another descending triangle formed at the top of the 2019 rally. Both instances of a descending triangle nailed their respective targets based on the measured motion in the pattern itself.
Targets of descending triangles are found by taking the highest point of the triangle, and measure to the horizontal baseline support. Ascending and symmetrical triangles are measured in the same way.
The distance in percentage price traveled within the pattern is typically the same distance to the target of the formation, after the breakout.
If the current descending triangle does the same and hits its target, the measured move should result in a drop to about $ 23,000.
Bulls will have to defend the level to resume the uptrend, or bears are given the opportunity to further push down prices, possibly back in a downward trend as was the case in 2019. Where is Bitcoin going now?
Featured image from Deposit Photos, Charts from TradingView.com