Bitcoin's attempt to break above $66,000 was turned back this week, sending the leading cryptocurrency into a corrective phase that has taken shape as a descending channel on the short-term chart. The rejection at the $65,600 resistance level confirmed the pattern, and the price has now slipped below the 50-day simple moving average — a level that has historically preceded sharper corrections in previous bear flags.
Descending channel takes hold
The rally that preceded the correction had been building a series of higher highs and higher lows, a structure that looked promising for bulls. But after touching $65,600, the price reversed and the short-term falling wedge pattern evolved into a descending channel. The bottom of that channel sits around $57,000, meaning there's room for another leg down if support fails.
The daily chart shows a different channel pattern compared to earlier bear flags, and that one leans bullish. Still, the price has room to descend to the channel bottom again, creating a lower low before any sustained recovery.
Stochastic RSI at a turning point
The Stochastic RSI indicator has dropped to its lower limit. If it turns back up from here, that could signal upside price momentum. The RSI itself is moving within an ascending wedge on the daily chart — a drop below that wedge would likely send the price toward the channel bottom.
It's a tight spot. The indicators are flashing mixed signals, but the fact that the Stochastic RSI is at an extreme suggests a bounce isn't out of the question.
Bulls need to hold the trendline
The bull market trendline is the key line in the sand. If the price bounces from the 200-day SMA or that trendline, the series of higher lows will remain intact. But if the price holds below the 50-day SMA, history from previous bear flags shows sharp corrections can follow.
Bulls need to defend that trendline during this corrective phase. If the price is above it by the end of the week, the odds of a bear market bottom increase significantly.
The article suggests the bear market is mostly over, but it may take two to three more months of sideways or downward movement for full capitulation. The price could continue chopping sideways for another three to four weeks before either falling below the trendline or breaking above $65,600.
For now, the immediate question is whether the descending channel will hold or break. The next few days will tell if the Stochastic RSI bounce materializes — or if the channel bottom at $57,000 becomes the next target.
