Hello Traders,

Today I will be discussing the formation of a Bear Flag and what this means for Bitcoin .

– As you can see on the chart BTC has been consolidating in an “Ascending” parallel channel since January.
1) An ascending formation is typically a Bearish signal.
2) In conjunction with the downtrend from the highs at $69K in November, this creates a bear flag .

– Now I’m sure some of you may be wondering… Well BTC consolidated last year in a channel before the massive pump to $69K, so won’t Bitcoin do the same this time? – The answer is no.

– Last year Bitcoin consolidated in a “Descending” channel which is typically Bullish .
– As expected BTC pumped coming out of that Bullish consolidation.

– This time BTC has created a Bear Flag and has a much higher probability of continuing lower before hitting previous ATH’s.

So what does this mean for BTC? Here are the 3 possibilities I see playing out..
1) (Highest Probability) BTC retests the $36K support level
2) (Medium Probability) BTC retests the $29K support level
3) (Lowest Probability) BTC retest the $20K support level .

I want to emphasize… Patterns have a certain probability of playing out. Bear flags have a relatively high probability of playing out and BTC has formed a textbook Bear Flag . This means the probability of BTC breaking down and even hitting $20K are still relatively high. Sometimes you have to zoom out and look at the bigger picture. I’m sure a lot of you will be discouraged by this, but think of how incredible it would be to accumulate BTC back at $20K!?

Good luck everyone and happy trading!