Bitcoin price has been steadily falling, locked in a downtrend over the course of the last few months, taking the price of the cryptocurrency to roughly 50% of the year’s high of $14,000.
After the latest sustained drop, Bitcoin has been consolidating in what now appears to be a bear pennant chart pattern formation, which suggests that yet another drop is ahead, and could take the price of the leading cryptocurrency by market cap to as low as $4,600 in the days ahead.
Bitcoin Price Forms Bear Pennant At Bottom of Downtrend
Once Bitcoin’s parabolic rally cooled off this summer, the first-ever cryptocurrency began to decline in price and has fallen back into a downtrend. In late October, the tides had appeared to be changing, with the crypto asset setting a historic single-day gain of over 40%.
But that rally turned out to be little more than a bearish retest of former support turned resistance, that only further cemented Bitcoin’s decline in the days ahead.
— CryptoHamster (@CryptoHamsterIO) December 10, 2019
After the burst of buying and FOMO on the heels of China news, the cryptocurrency resumed its downtrend, and the latest fall took the price of the asset from a local high of $10,500 to as low as $6,500 before bouncing and consolidating at current prices around $7,500.
The steep drop resulted in a flag pole for a bear pennant chart formation on Bitcoin price charts. The cryptocurrency has been trading within the structure for nearly three full weeks now, and a break of the pattern could be any day now as the price nears the apex of the triangle-like pattern.
Pennant Targets $4,600, Crypto Asset’s 2019 Rally Almost Entirely Erased
If the pattern is valid, Bitcoin price may have closed a daily candle outside of the pattern, suggesting that a breakdown is imminent. If a breakdown occurs, the bear pennant could have a measured target of as low as $4,600.
Reaching such a low would nearly erase all of Bitcoin’s gains throughout the calendar year thus far, and take the asset back to prices not seen since April of this year.
— Livercoin (@livercoin) December 10, 2019
If the pennant breaks up, shocking bears shorting with the current trend, it could push Bitcoin price back up above the $7,000 range, where it would need to reclaim a new high in the $8,000 range, before making any further attempts higher.
Pennants, like flags, form when one side of buying and selling is taken by surprise, causing extended buying or selling resulting in a long, flagpole-like candle. Once price begins to consolidate at the bottom or top of the flagpole, a flag or pennant results. Flags are rectangular shaped, and often slope toward the initial breakout, while pennants are triangular-shaped, and typically are more symmetrical in their patterns.