The Bitcoin price initiated a bounce on November 25. It failed to reach a close above the resistance area at $7400. It is possible that the price drops to the support area at $7000 before making another attempt at a breakout.
Bitcoin Price Highlights
- The Bitcoin price failed to create a morning star pattern.
- There is resistance at $7400.
- There is support at $7000.
- The price might create a reverse head and shoulders pattern.
Failed Morning Star
On November 23, the Bitcoin price bounced on the support line of the channel for the second time. This movement was combined with a bullish divergence in the RSI.
However, the ensuing increase stopped once the Bitcoin price reached the resistance line at $7400. Additionally, since the price failed to reach a close above the opening price of the previous bearish candlestick ($7300), it failed to create a morning star pattern.
The two long upper wicks near the resistance area are a sign of selling pressure. Unless the price flips the area and uses it as support, we can expect the Bitcoin price to drop towards the support line.
If the Bitcoin price reaches the support line and creates even more bullish divergence, it would be a very suitable place to initiate a long position.
Reverse Head and Shoulders
Looking at lower time-frames, we can see that the Bitcoin price has previously flipped the $7000 area as support. Therefore, we could revisit those levels before the price makes another breakout attempt.
This movement would complete the right shoulder of a reverse head and shoulders pattern.
For our previous analysis, click here.
Disclaimer: This article is not trading advice and should not be construed as such. Always consult a trained financial professional before investing in cryptocurrencies, as the market is particularly volatile.
Images courtesy of Shutterstock, TradingView.
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Source: Be In Crypto