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Citing data from a daily Bitcoin (BTC) chart, Peter Brandt advises caution, as he identifies a bearish pennant pattern formed by the asset.
After a brief period of revival, Bitcoin (BTC) has succumbed to bearish pressure, resulting in intermittent declines that have pushed the asset below the $27,000 threshold. With market participants hopeful for a recovery, experienced trader Peter Brandt foresees the possibility of the asset dropping even further from its present position.
In a recent tweet, Brandt identified a bearish pennant pattern formed by BTC on its daily chart.
This is known as a pennant or flag and has short term bearish implications unless negated by close above mid point highs. $BTC pic.twitter.com/kLz6aTHMrz
— Peter Brandt (@PeterLBrandt) May 24, 2023
According to the accomplished analyst, the pennant signals a short-term bearish price movement for Bitcoin unless the asset is able to close above the mid-point highs. Closing above the mid-point would negate the pennant formation. The mid-point is the average between the highest and lowest prices within the consolidation range.
A pennant or flag is a common chart pattern that indicates a temporary consolidation before the resumption of a previous trend. It is considered a continuation pattern, as it suggests that the price is likely to continue moving in the same direction as it was before the formation of the pattern.
Pennants can either be bullish or bearish, depending on the previous trend. The recent pennant identified by Brandt is a bearish one because it indicates that the current downtrend is likely to continue. This could lead to further dips in Bitcoin’s value.
A quick investigation carried out by The Crypto Basic confirms Brandt’s chart patterns. Notably, Bitcoin formed the flagpole of the pennant following a drop from $29,820 on May 6. The asset registered consistent declines from the $29,820 high, printing 8 consecutive daily losing sessions from May 6 to May 13. A comeback from the asset resulted in a consolidation, forming the flag.
When the flag forms, it signifies that market participants are taking a brief break, causing the price to consolidate within a smaller range. This consolidation typically occurs due to indecision, or reduced market activity. While the pennant suggests that the downtrend will resume, BTC could completely negate the pattern if it closes above Brandt’s mid-point value.
Could Bitcoin Stage a Recovery?
However, it is important to note that Brandt revealed in an analysis two days ago that BTC will likely face “one more shakeout” before skyrocketing to higher values. However, the analyst stressed that this forecast is merely a “guess.” The asset was trading around $26,800 at the time, trapped in the ongoing consolidation.
Market participants are left questioning whether the mentioned “one more shakeout” pertains to the anticipated continuation of the recent downtrend, as the analyst has not provided further clarification. As of press time, BTC is currently trading for $26,740, down 2.09% in the past 24 hours.