Bitcoin Closes Weekly Candle Below $60K: Next Leg Down or Rally Back Up?

While tensions in the Middle East boil over and erupt and the U.S. stock market wavers, Bitcoin is holding at $60K. Nevertheless, $BTC did close below this level in the weekly time frame. Is this a signal that the price is weakening and is about to go lower, or can the bulls still pull off a rally?

Bears taking control of short-term time frame

Source: TradingView

The short-term time frame chart for the $BTC price gives us the story for the month of June. This is basically that the price fell out of the last big bear flag, crashed to a $60K bottom, and then rallied up on three separate occasions, which led to a head and shoulders pattern. This pattern broke to the downside as expected, and a new local low of $58K was made. Since then, the price has tried to rally higher but is generally being prevented from doing so by the $60K horizontal level which has been turned into resistance.

To put into perspective which of the bulls or the bears are in charge in this short-term time frame, the bears achieved a correction of around $7,500 from the top of the right shoulder of the H&S pattern down to the new low. In retaliation the bulls have only managed to rally back $2,160, and while there may be more time left in this rally, the $BTC price action is now taking place below the bull market trendline. A potential big drop may not be that far off.

$BTC price on the brink

Source: TradingView

In the daily time frame it can be seen how the $BTC price is right on the very brink. Having fallen through the bull market trendline, the price is balanced precariously on the last horizontal support. 

It can be noted that the Stochastic RSI indicator lines have just crossed up in this important time frame and are possibly about to head back to the upside, but that said, it is probably best to keep an eye on the price action this week and to see if the bull market trendline can be regained. As things stand, both in the shorter and medium term time frames, the bears are still very much in control.

Weekly candle close very bad for the bulls

Source: TradingView

The weekly time frame illustrates just how much control the bears now have. Last week’s candle close was about as bad as it gets for the bulls. The close was well underneath the 200-week SMA and also below the bull market trendline. If there is to be one more leg down, the scene is most definitely set for it.

What the bulls do have is the possibility that the Stochastic RSI indicator lines bottom soon and turn back up again. However, as can be seen previously, the indicator lines can stay bouncing along the bottom for an extended period of time. 

If a drop below this last support does take place, $50K or lower could be the eventual target.

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.