A bitcoin bearish reversal has just started and paused the BTC rally which made it successive to a major pullback according to analyst Vince Prince so let’s read more in today’s latest Bitcoin news.
Prince said on Monday that there’s a 35 chance that the BTC price will fall in the upcoming sessions citing a textbook technical indicator that foresees bearish reversal patterns. The head and shoulders pattern appeared during an asset uptrend and the traders usually confirm it once they see the formation of three peaks on the baseline support level. the middle peak is taller than the two previous ones which make it look like a head handing atop two shoulders at each side.
The H&S pattern ends up in a breakout below the baseline with a downside target below following the maximum height of the structure. Prince spotted BTC forming a similar technical setup with the left shoulder and head confirmed and the right shoulder established partially. He added:
“Bitcoin is trading already in overbought zones. This does not mean it [cannot] move higher and form new highs. However, the bearish perspective should not be underestimated in any case. Bitcoin is moving into zones where a swift reversal and change in direction can establish more easily.”
If valid, the H&S patterns risked putting BTC at $1,600 below the baseline while the yellow range in the charts shows the ideal head and shoulders pattern breakout target range. Prince has a bearish outlook on BTC because of the involuntary support from the crypto’ futures market. According to Glassnode, the funding rate across the BTC exchanges rose to levels that suggested traders could become overleveraged via perpetual contracts.
The Bitcoin bearish reversal signs were measured every eight hours as the funding rate shows. A positive reading indicates that the bulls are paying the bears and this raises the value of the perpetual contracts above Bitcoin’s spot rate. High funding rates signal leverage that is now biased in favor of the bulls. In an overbought condition, Prince believes in a limited corrective downtrend as he noted that BTC will find support at the H&S neckline and will increase even more. With Bitcoin holding the support of the 65-EMA and the blue horizontal support, the bullish breakout has a huge possibility of 65% according to Vince.
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