Bitcoin (BTC) price has been trying to recover since May 12 but it has not been able to regain the previous breakout level.
Unless Bitcoin manages to do so in the near future, the downtrend will continue.
Technical analysis from the daily timeframe gives a bearish prediction for Bitcoin. This is due to a breakdown below the dominant head and shoulders pattern, which is considered a bearish pattern.
The pattern is formed with the top in the middle being higher than the peaks on either side and is completed after the price breaks below the pattern.
After the next bounce, BTC price validated the neckline of the pattern as resistance (red icon) on May 15 and declined over the next 24 hours.
A downward move equal to the height of the pattern will take BTC price to $23,300. This target also coincides with the 0.5 Fib retracement support, so it is likely to act as the bottom of this movement.
The daily Relative Strength Index (RSI) favors a continuation of the downtrend as it lies below 50 and slopes down.
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BTC/USDT Daily Chart | Source: TradingView
There are two potential wave counts for future motion. The number of bearish waves shows that BTC price has completed a 5-wave upward movement (black). If so, it is trading inside the ABC corrective structure (white).
This structure will bring the price towards the 0.5 Fib retracement support at $23,400, which is close to the target of the pattern.
BTC/USDT Daily Chart | Source: TradingView
The bullish wave count shows that BTC is currently in wave four of a five-wave bullish impulse. So, another rally to $33,000 is expected.
While this doesn't fit the forward head and shoulders pattern, it does fit the parallel channel connecting the tops of wave one and three.
BTC/USDT Daily Chart | Source: TradingView
A drop of BTC price below the top of wave 1 at $25,270 (red line) will confirm that the number of bearish waves is correct. This is because the Elliott wave theory indicates that wave four cannot enter the territory of wave one (red line).
In addition, this also caused a breakdown from the parallel channel and caused the BTC price to drop to $23,200.
