Bitcoin Technical Analysis March 12: Bear Flag Consolidation – Much Lower Prices Realistic?

While some would point to the slightly recovering $BTC price as a bottoming pattern, this very pattern is starting to bear the hallmarks of a bear flag. Will Bitcoin fall through the bottom of this flag and head down to a true bear market bottom, or will this bear market be different?

$BTC price holding major support - up or down from here?

Source: TradingView

Some might say that the $BTC price is holding up remarkably well considering the stress the Middle East conflict is putting on markets. After all, Bitcoin is one of the most liquid assets on the planet, and if and when yet another grey or black swan hits, Bitcoin is quite often the first to be sold, precisely because it is usually the only one that can be sold - especially at weekends.

Nevertheless, from a technical analysis point of view, this consolidation period for $BTC is looking very much like the second of two big bear flags that are classic continuation patterns for a bear market.

In the short-term time frame chart above, the price is so far managing to hold above the major horizontal support level of $69,000. It can be seen that a minor trendline is forcing the price down into a narrowing area between it and the support line. Given that the Stochastic RSI indicators are nearly at the bottom, and major support is major support, it would be expected that the price would exit this triangle to the upside.

100 and 50-day moving averages playing the same role again?

Source: TradingView

Is the writing on the wall? If we look at the 100-day and 50-day simple moving averages (SMA), we can see that the 50-day SMA cut through the middle of the first bear flag and then acted as resistance to force the price down out of the bottom of the flag. The 100-day SMA was what helped to buttress the top of the flag and the descending channel when it looked as though the price could break out.

Looking at the second and current bear flag, exactly the same scenario could be in the process of playing out. The $BTC price is being forced down by the descending 50-day SMA. Will the price break through, only to meet with the top of the flag, the top of the descending channel, and the 100-day SMA?

Also, observing the RSI at the bottom of the chart, two clear ascending channels can be seen that correspond with the price action in the bear flags above. The breakdown of the first channel heralded the breakdown of the price out of the first bear flag. Is this going to happen again and give us warning before the potential plunge begins?

Similar pattern playing out as for previous bear market?

Source: TradingView

Moving out into the weekly time frame and comparing this bear market with the previous one, it can be observed that they are following a very similar pattern. One could practically say that this is a fractal pattern - two bear flags that lead to the first bottom of the bear market. 

If this holds true for the current bear market, one more drop awaits before a bottom is reached. A double bottom was put in for all previous bear markets, so this could possibly lead to a little more downside, but the second bottom does not necessarily have to be lower.

If one regards the downtrend line for the previous bear market, it can be seen that when it is broken and then confirmed, this is the exact bottom of the correction.

Finally, some analysts are saying that we need a full 70% + correction, as for all previous bear markets. However, if one takes into account diminishing returns to the upside, surely the same would be true for the downside. Already it can be seen that the current RSI bottom matches the first double bottom of the previous bear market - so could the $60,000 pivot low have been the first of the double bottoms for this bear market?

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.