Red Alert: Bitcoin’s Recovery Momentum May Fade as Technical Indicators Turn Bearish
Bitcoin prices have rebounded this week following the Federal Reserve’s uncertain interest rate decision on Wednesday.
Bitcoin rose to a high of $87,375, marking a 13% gain from its low this month and its highest level since March 7.
The rally was accompanied by gains in other assets such as stocks and commodities. US stock indexes, including the Dow Jones and S&P 500, both rose more than 1% following the FOMC decision. Gold hit a record high of $3,100, while copper prices also surpassed the $10,000 mark.
Bitcoin’s rally may have been fueled by Jerome Powell’s expectation that tariffs from Donald Trump’s policies will create temporary inflation. In this scenario, the Fed could cut interest rates more than the market expects. This explains why the yield on the 10-year Treasury note, which is sensitive to interest rates, fell following the Fed's decision.
However, these assets have begun to give back some of their earlier gains, with the Dow Jones futures down 200 points and the Nasdaq 100 futures down 145 points.
Technical Forecast Suggests Bitcoin Price May Continue Downtrend
Current technical chart patterns are pointing to the possibility of Bitcoin continuing to decline in the coming days. The daily chart shows the formation of a rising wedge pattern, a popular bearish sign in technical analysis. This pattern consists of two converging uptrend lines, and a breakout below is possible when the two converging lines intersect.
Bitcoin has also formed other bearish signals. Specifically, a "death cross" pattern appeared when the 50-day moving average (MA) crossed below the 200-day MA. This is also a popular technical pattern that indicates a strong bearish trend.
Previously, Bitcoin formed a double top pattern at $108,233, with a neckline at $89,000. Currently, the coin is trying to retest this important support level. If this level is broken and the test is unsuccessful, it will be a sign that the downtrend will continue.
Price Target and Downside Forecast
Based on current technical signals, Bitcoin's first downside target is $76,750, the low of this month. If the price falls below this level, it is likely to continue falling to $74,070 - the high of March last year. This means that Bitcoin could fall another 14% from the current price.
However, if the price drops and successfully tests this support level, it could be a positive signal, indicating that a new recovery could follow.
