Bitcoin dropped to as low as 39,558.70 today but it has registered only a false breakdown with great separation below the 40,000 psychological level signaling that the downside movement could be over.
Still, we need strong confirmation that BTC/USD ended its drop and that the price could develop a new leg higher. It's premature to talk about a potential strong upwards movement as long as Bitcoin stands under strong upside obstacles.
The price of Bitcoin is down by 10.63% in the last 7 days and by 1.27% in the last 24 hours. Despite the current rebound, the bias remains bearish.
BTC/USD false breakdown with great separation
The BTC/USD registered a false breakdown with great separation below the median line (ml) of the Descending Pitchfork signaling that the sellers are exhausted. Also, its failure to reach and retest the channel's downside line signaled an oversold situation. Still, as long as it stays under the 41,967.50 - 42,745.20 area and below the downtrend line, the outlook is bearish.
Technically, the down channel may represent a bullish pattern. A valid breakout above the downtrend line could announce a new swing higher. In the short term, BTC/USD could move sideways before deciding direction.
BTC/USD outlook
As long as it stays under the downtrend line and below the 42,745.20, BTC/USD could drop again towards the median line (ml) which stands as a dynamic support. Moving sideways above 40,000 followed by a valid breakout through the downtrend line could announce a new leg higher and bring new long opportunities.
