Bitcoin
$47,642.15-1.80%
Ethereum
$3,349.06-3.89%
XRP
$1.07-1.77%
Cardano
$2.36-1.52%
Polkadot
$33.79-4.47%
Stellar
$0.319453-2.10%
Dogecoin
$0.238217-1.91%
Chainlink
$28.08-2.78%
Uniswap
$23.96-3.02%
Polygon
$1.35-2.96%
Litecoin
$177.91-2.62%
Bitcoin Cash
$617.15-2.72%
Cosmos
$41.18+4.79%
Algorand
$2.03-1.51%
Wrapped Bitcoin
$47,679.41-1.82%
Filecoin
$83.19-2.40%
The Graph
$0.826872-1.68%
Tron
$0.105223-2.30%
Ethereum Classic
$56.21-2.63%
Aave
$345.12-4.88%
Tezos
$6.28-5.76%
EOS
$5.10-5.72%
NEO
$49.22-2.00%
Monero
$266.79-1.68%
IOTA
$1.58-5.35%
BitTorrent
$0.003900-1.83%
Bitcoin SV
$156.70-1.60%
Waves
$28.17-4.97%
Maker
$2,817.47-2.40%
Dash
$196.56-3.94%
Decred
$139.86-4.34%
Decentraland
$0.810993-2.48%
ICON
$1.86-4.24%
NEM
$0.181314-2.27%
Zcash
$137.48-2.37%
OmiseGO
$9.76+13.44%
NuCypher
$0.330693-0.52%
Qtum
$12.32-2.59%
Bitcoin Gold
$64.84-3.39%
Yearn Finance
$33,180.27-2.77%
Basic Attention Token
$0.741100-3.23%
0x
$1.08-3.93%
Paxos Standard
$0.997786-0.06%
Ren
$0.946607-5.27%
Bancor
$4.02-2.69%
Fetch.ai
$0.804706-6.92%
Band Protocol
$9.20-1.98%
Siacoin
$0.018425-3.31%
Kava.io
$6.11-2.31%
Nano
$5.72+3.51%
Loopring
$0.459434-0.31%
Storj
$1.36-3.81%
Lisk
$3.69+2.34%
Civic
$0.514866-5.08%
Numeraire
$45.55-7.19%
Orchid
$0.379161+0.70%
PAX Gold
$1,772.55+0.41%
Augur
$25.79-2.10%
Aragon
$6.36+3.33%
Enzyme
$119.01-4.61%
district0x
$0.179910-0.20%
Kyber Network
$1.77-3.44%
SingularDTV
$0.001425+0.61%
Tether
$1.00+0.06%
USD Coin
$1.00+0.10%
Dai
$1.00+0.02%

Bitcoin Faces Further Losses if Bulls Can't Disrupt Bearish Chart Pattern

Bitcoin has formed a bearish head-and-shoulders pattern with neckline support at $9,400.

Feb 25, 2020 at 11:21 a.m. UTC
Updated Sep 13, 2021 at 12:21 p.m. UTC

View

  • Bitcoin has formed a bearish head-and-shoulders (H+S) pattern with neckline support at $9,400.
  • An H+S breakdown would imply a short-term bearish reversal and expose deeper support near $9,070.
  • A move above $10,128 is needed to revive the immediate bullish setup.

Bitcoin (BTC) is down but not out, with prices holding above key support near $9,400. However, if that level is breached, more chart-driven selling may be on the cards. 

The top cryptocurrency by market value is currently trading around $9,560, representing a nearly 2 percent drop on the day, according to CoinDesk’s Bitcoin Price Index

Prices fell from $10,000 to $9,500 on Monday, engulfing the preceding day’s price gain. The drop came as stocks collapsed and classic safe-haven assets rallied on the coronavirus scare. Notably, the Dow Jones Industrial Average fell by over 1,000 points, while gold rose to $1,676 per ounce – the highest level since February 2013.

With bitcoin failing to post gains during the risk-off tone in the financial markets, the popular narrative that the cryptocurrency is a haven asset has weakened. Prices rallied by 30 percent last month amid the U.S.-Iran tensions and the coronavirus outbreak in China, convincing the analyst community of its strengthening safe-haven appeal. 

With Monday’s drop, bitcoin has also formed a head-and-shoulders pattern on technical charts, as seen below. 

12-hour chart

The head-and-shoulders pattern is a sign of a bearish reversal. A drop below the neckline support marks a transition from a bullish higher-lows, higher-highs setup to bearish lower highs and lower lows. 

At press time, the neckline support is seen at $9,400. Acceptance under that level would confirm a breakdown and create room for a deeper decline to $8,300 (target as per the measured move method). 

Seasoned traders would argue a head-and-shoulders breakdown often traps sellers on the wrong side of the market. While that can be true, its effects depend on context. If the pattern appears following a notable price rally or at multi-month highs, as is the case here, the breakdown tends to cause more sellers to join the market, keeping prices low. 

That said, a post-breakdown sell-off, if any, could be cut short near the crucial support levels lined up at $9,188 – bitcoin had turned lower from that level on Jan. 19 – and the higher low of $9,075 created on Feb. 4. 

1-hour chart

Sellers failed to keep prices below $9,500 during the early European trading hours. Moreover, dips below that level have been consistently short-lived since Feb. 19. 

If that level continues to restrict losses during the U.S. hours, some buying pressure may emerge to lift prices back to $9,750-$9,800. The outlook, however, would turn bullish only if prices rise above $10,128, as discussed Monday. 

Disclosure: The author holds no cryptocurrency at the time of writing

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Loading...