Technical analysts have warned that Bitcoin's price could sharply reverse based on the head and shoulders pattern discovered on the 4-hour chart.
According to Crypto News on the 24th (local time), while Bitcoin is showing a slight upward trend at $92,647, technical analysts are sounding an alarm. Crypto chart analyst Melika Trader confirmed that a head and shoulders pattern, considered a major reversal signal, is forming on Bitcoin's 4-hour chart.
This structure includes a top with two heads and the currently forming right shoulder. Melika pointed out that Bitcoin might attempt a false breakout above the $87,000 to $88,000 resistance range, which could attract breakout traders before a sharp reversal. If this pattern is confirmed, Bitcoin could drop to $78,000, which aligns with the major support line in March.
"This is a typical bull trap scenario. The neckline is currently holding, but momentum is weakening," Melika said.
Bitcoin's recent surge occurred as the US Dollar Index (DXY) fell below 100. This resulted in a weakening of the greenback and enhanced Bitcoin's appeal as a macro hedge.
As a result, daily trading volume exceeded $37 billion, and Bitcoin remains at the top of the cryptocurrency ranking with a market capitalization of $183 billion.
Despite short-term weakness, the long-term market sentiment remains cautiously optimistic. The circulating supply of Bitcoin, reaching 19.85 million out of a total of 21 million, continues to drive the scarcity narrative.
However, buying pressure may face turbulence due to the major resistance zone near $94,737 and the psychological pressure of $100,000.
The current price action approach for new traders is as follows:
* Buy entry point 1: Rebound with a bullish candle close at $91,585 (Fibonacci 0.382)
* Buy entry point 2: Confirmed breakout above $94,737 with strong trading volume
Trading targets
* First target: $96,525
* Second target: $98,386
Stop-loss options
* Conservative: Below $89,631 (Fibonacci 0.618)
* Aggressive: Below $90,610
The 50-period Exponential Moving Average (EMA) at $88,405 is showing an upward trend and strengthening the basic trend, but the MACD histogram turning red suggests weakening momentum. Traders should be cautious of false breakouts that could trigger a sharp decline until the price definitively breaks through $94,737.
Bitcoin may be preparing for a breakout or could be a bull trap. Continuous movement above $94.7k could open the way to $98k, but if the head and shoulders pattern materializes, a sharp drop to $78k could be the next step.
As always, price action should guide decision-making, and rash trading without confirmation should be avoided.
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