Bitcoin’s Bear Flag Formation: What Traders Need to Know

The crypto market is buzzing as Bitcoin’s price action shows the emergence of a bear flag pattern on the four-hour chart. Traders are closely monitoring this development, which raises concerns about a potential price drop, with projected targets diving down to $97,000.

Analyzing the Bear Flag Pattern

Bitcoin’s recent price movements have formed a classic bear flag—a bearish continuation setup that develops when the price consolidates upward within a parallel channel following a sharp drop. Specifically, this pattern began to take shape after Bitcoin hit a low of around $103,100 on May 31. Over the weekend, BTC has been persistently testing the support line of the flag.

A significant breakdown is expected if Bitcoin slips below the critical support level at $104,800. Should this occur, the projected downside target aligns closely with the bear flag’s measurement, estimating a drop to about $97,690.

Market indicators also reflect bearish sentiment. The relative strength index (RSI) rests at 44, suggesting that market momentum is tilted towards a downward trend, reinforcing the caution surrounding Bitcoin’s price trajectory.

Key Support Levels to Watch

Data from Cointelegraph Markets Pro and TradingView indicates that Bitcoin’s price has retreated by 6.3% from its recent all-time highs exceeding $111,000. Despite an 11% gain in May, uncertainty lingers regarding Bitcoin’s next movements as traders analyze potential support and resistance zones.

According to crypto analyst Daan Crypto Trades, keeping an eye on the mid-range at $99,600 and the previous all-time high of $108,000 will be crucial during early June. Any break above $108,000 could see the price testing its all-time high around $111,900 but may encounter strong resistance, triggering a pullback.

Conversely, if Bitcoin drops below $99,600, it may find support near the 200-day simple moving average at approximately $97,600. With opinions varying within the market, traders remain agile, prepared to navigate fluctuating trends.

Another analyst, AlphaBTC, indicates that a sizeable correction appears to be in play, likely extending into the second week of June. He emphasizes the importance of the $92,000 yearly opening level as a potential buying opportunity. A failure to regain momentum here could lead Bitcoin down to the $85,000 region, amplifying bearish sentiment as market conditions evolve.

As traders analyze the weekly and monthly closes, the psychological thresholds at $100,000 and $97,000 continue to capture attention. The movements of Bitcoin in June, historically a volatile month, will be crucial for determining the overall market direction.

Understanding these dynamics can help investors remain informed as they navigate the complexities of the cryptocurrency landscape, but it’s essential to approach each trading decision with diligence and care.