By Franklin Smith
Head and shoulders setup is among the most dependable formations to determine a bullish-bearish trend reversal. Bitcoin has developed such a pattern and might suggest a downward move to $30,000.
According to Investopedia, a head and shoulders setup is a chart pattern that emerges as a base with three highs. The outside two peaks seem similar in height. However, the middle one is the highest. This pattern shows a formation that projects a trend reversal from bullish to bearish on a technical viewpoint. It is among the top setups that show an upside trend nears and end, with different degrees of accuracy.
Besides taking the head-shoulders pattern seriously, there must be a drop in volume, starting higher from the left shoulder and declining from the region. BTC’s volume satisfies this reading, and the weekly chart reveals the narrative.
As Bitcoin clearly illustrates the pattern, market players might see lower price actions. The world’s leading crypto can even dip beneath $30,000.
Nevertheless, Bitcoin has struggled in 2022 as of now. Fed Reserve’s Jerome Powell ruined sentiment in risk markets on Wednesday. The official suggested that financial constriction in the United States would be faster and more hostile than expected. Risk markets reacted will massive losses, leaving most digital coins looking for reliable support floors.
Though Bitcoin appeared to mute its downtrends this week, its overall outlook remains pessimistic due to massive losses witnessed in the crypto space in the past few weeks. If the global cryptocurrency market depends on BTC to lead the upward journey, they might be saddened as Bitcoin struggles with the closest resistance.
For now, the $37,500 obstacle appears to challenge Bitcoin as the level currently provides a near-term resistance. Remember, Bitcoin should overcome this hurdle to challenge the vital level at $39,600. Bulls might fail to conquer this zone with its current moment, leaving the token prone to further drops. Such scenarios might see Bitcoin establishing a near—term trading zone at $39.62.K – $32.98K. Losing this territory will mean tanking to levels beneath $30,000. Nevertheless, that move might provide an opportunity for long and short trades, attracting buyers.