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Home Technical analysis BTC

A Dangerous Technical Pattern In Bitcoin Is Back, And It Is Breaking Down

Tony Spilotro by Tony Spilotro
1 month ago
in BTC
Reading Time: 3min read
bitcoin dangerous triangle pattern
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Bitcoin price is barely holding onto support at $30,000 and it could soon be lost for some time to come, if a pattern that has cut the cryptocurrency down to size confirms.

The pattern itself has proven dangerous for Bitcoin in the past, and appears to be in the process of breaking down now. Here’s how past patterns have played out, and downside targets if the bearish pattern is valid.

Descending Triangle: The Most Dangerous Technical Pattern In Bitcoin

Technical indicators such as the MACD and Average Directional Index have signaled a change in trend on daily timeframes for more than a week now.

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Across the now three weeks of price action in Bitcoin since the current 2021 peak at $42,000, the leading cryptocurrency by market cap has bled over $10,000 and could be at risk of more downside.

Related Reading | Bear Trend Begins To Take Hold In Bitcoin For First Time Since October 2020

The resulting consolidation below the first major resistance level since $20,000, has potentially formed a descending triangle pattern – a chart pattern that has been devastating for Bitcoin bulls in the past.

bitcoin descending triangle

The top cryptocurrency is potentially breaking down from a descending triangle | Source: BTCUSD on TradingView.com

Descending triangles are typically bearish patterns, that result in a strong move to the downside once the bottom horizontal support line is breached.

That breach, might be taking place today, and a deeper plunge is possible if the pattern confirms as valid.

How Past Instances Of The Pattern Breaking Down Impacted Crypto

Anyone who has been invested in Bitcoin since 2017 should be more familiar with the descending triangle pattern than they would like to be.

It was the pattern that took the cryptocurrency to its bottom at $3,200 after trading inside the structure for nearly all of 2018.

bitcoin descending triangle zoomed

Past descending triangles have always hit their respective target | Source: BTCUSD on TradingView.com

Another descending triangle formed at the top of the 2019 rally. Both instances of descending triangle nailed their respective targets based on the measured movement inside the pattern itself.

Targets of descending triangles are found by taking the highest point of the triangle, and measuring to the horizontal baseline support. Ascending and symmetrical triangles are measured in a similar manner.

The distance in price traveled percentage wise within the pattern is typically the same distance to the formation’s target, post-breakout.

Related Reading | Evening Star: Reversal Pattern Could Sunset Bitcoin Price Action For Weeks

If the current descending triangle does the same and reaches its target, the measured move should result in a drop to around $23,000.

Bulls will need to defend the level to resume the uptrend, or bears will have the chance to keep pushing prices lower, potentially back into a downtrend as was the case in 2019. Where does Bitcoin go next?

Featured image from Deposit Photos, Charts from TradingView.com
Tags: bitcoinbtcbtcusdBTCUSDTcryptodescending trianglexbtxbtusd
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a digital media executive and global remote work leader with a decade of content experience and excellent. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter and feel free to drop me a line if you would like to work together.

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