Just like other higher-yielding assets, Bitcoin price has been trading lower against the US dollar these past few trading days. The daily chart of BTCUSD even reveals that the cryptocurrency has made lower highs after a series of higher highs and surging past the $10,000.00 psychological handle. Unfortunately for the bulls, the rally was not sustained. Instead, a head and shoulders chart pattern has materialized.
This chart pattern is considered as a bearish reversal signal in forex trading. BTCUSD has already broken support at the neckline which was around $9,689.00. This means that we could soon see the cryptocurrency trade lower. If there are enough sellers in the market, Bitcoin price could fall to near-term support which is around $8,800.00. This price coincides with the 200 SMA. Additionally, the psychological handle also aligns with the rising trend line when you connect the lows of December 17 and January 2.
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However, if there are still buyers in the market, we could see bitcoin price trade higher and test the neckline at $9,689.00 for resistance. A bullish close above $10,000.00 may even invalidate the head and shoulders chart pattern. It could indicate that Bitcoin price may soon make another run for $10,500.00.
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