Something of a rally since Sunday has seen the Bitcoin price rise to touch and confirm the bottom of its bear flag. Is the next big leg down about to happen, or could a weakening US dollar still save the day for Bitcoin? DXY falling through multi-year trendline Source: TradingView The US Dollar Index is showing that the dollar is currently falling through a trendline that began in 2008. If the breakdown is confirmed at the end of this week, a drop to just under $90 could be the target. The outcome of such a move would be to make it easier for the US to pay the interest on its debt this year, but also it would send assets higher. This is where Bitcoin could benefit. The market believes that rates will remain unchanged for the FOMC meeting later today. However, with Federal Reserve Chairman Jerome Powell due to leave his position in May, the next Trump-preferred chairman is likely to speed up rate cuts, also leading to an advantageous environment for the likes of Bitcoin. $BTC price confirms bear flag breakdown Source: TradingView The 4-hour time frame for $BTC reveals that the price has just managed to touch the bottom trendline of the bear flag . Unless the price rises from here and gets back inside the bear flag, the breakdown has now been confirmed. So will this turn into the next big leg down? This is certainly a possibility. All the short-term momentum indicators, out as far as the 12-hour , are at the top and ready to come back down. Some kind of a reversal from here is much more probable than not. In favour of the bulls is that the $BTC price has broken through a downtrend line, and has maintained above. As can be seen in the chart, there is another, firmer trendline, not far from the price. If this can also be broken it would further help the cause of the bulls. Be that as it may, if the price falls below the last local low of $86,000, then $80,000 becomes a distinct possibility. Next downward impulse - how far will it go? Source: TradingView Moving out into the daily time frame brings the bear flag more into focus. It can be observed that so far a classic breakdown is taking place. The $BTC price has fallen out of the flag and has come back to confirm it. A downward impulse would seem to be the most probable next move. It just remains to be seen how far down this will go. Could the support at $86,000 succeed in making this a very shallow reversal? This isn’t likely, but if Fed Chair Powell is particularly dovish in today’s FOMC meeting, who knows? If the measured move out of the channel takes place, the price would go down to around $80,000. This could either then become a double bottom , or the price could continue on to the $74,000, down to $69,000 horizontal supports, which mark the top of the 2021 bull market. $86,000 is very strong support level Source: TradingView Moving out further into the weekly time frame, it becomes apparent that the $86,000 horizontal support is actually a very strong one. Looking left from the current $BTC price , it can be seen that there are a lot of touches at this level. This means that if the bulls can somehow hold the price above by the end of this week, an upside rally could still develop. On the other side of the coin, if this level is broken to the downside, a quick plunge to the 2021 bull market high would be a real possibility. At the bottom of the chart, the Stochastic RSI indicators still have the blue fast line above the orange slow line. If this persists, there is still hope left for the bulls. 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.
