BTCUSD - Further retracement to 97700 after protracted reversalOn the daily chart, a large head and shoulders pattern appears close to completion, suggesting a potential reversal of the recent uptrend. The formation is somewhat uneven, but in volatile markets like this one, clean textbook patterns are rarely seen.
Continued bullish sentiment has slowed the reversal, with buyers stepping in to support the price during each dip.
If we consider the April to May uptrend as a single move, the first Fibonacci retracement level aligns with support at 103,000. This level has been respected on both sides of the head and also serves as the neckline of the head and shoulders pattern. A break below 103,000 in the coming days could open the way toward the next support level near 98,000.
The right shoulder has not yet fully developed. Unless the price moves decisively above 106,900, we may continue to see the kind of sideways movement that formed the left shoulder, leading up to a potential breakout to the down side.
Should the price break above 107,000 with strong momentum, the pattern could fail, potentially triggering a bullish breakout and a long opportunity. However, recent candles appear more bearish than those of previous sessions.
Decreasing volume trend across the H&S pattern, along with a falling RSI and a bearish MACD crossover, provides further evidence of a reversal. The momentum appears to be shifting in favour of the bears, while the bulls are losing steam.
