Short-Term Technical Pattern
Bitcoin’s chart analysis suggests that the price has formed a key short-term technical pattern. This pattern could be a harbinger of extreme volatility ahead, with the possibility of a quick dump to $38,000 or a pump towards $48,000 depending on how the pattern is broken.
Amid its consolidating back from the year-to-date highs near $45,000 it hit earlier this month, the BTC price has formed a pennant structure, characterized by the price being gradually squeezed by higher lows and lower highs. These patterns often form in periods of market consolidation (like we have seen over the course of the past week) and usually precede a meaningful breakout to the upside or downside.
If BTC breaks its pennant structure to the downside, a quick test of the $40,000 level would be very likely due to technical selling. A retest of $38,000 would also be very likely, given that many Bitcoin bulls may be reluctant to dip buy until they saw the $38,000 level (where the 50DMA also resides) tested and confirmed as support.
Conversely, if BTC breaks to the upside of its recent pennant, a fast bounce to the yearly highs near $45,000 would be in order and bulls would probably once again start pushing for a retest of the 2022 highs above $48,000.
