Bitcoin continues to trade between a 100 dollar range, with $3950- $4050, being support and resistance.  As of writing, BTC is currently at $4034, according to Coinmarketcap.

The cryptocurrency has begun to form a rising wedge with lower volume. A chart pattern such as this is a precursor for a substantial price drop.

If this happens, Bitcoin is expected to drop to $3600 firstly, and if support doesn’t hold, then $3400 would be seen as the next strong support.

BTC had failed to consolidate above $4000 for a while now and was rejected pretty hard in February when the price reached $4200, before dropping back down to $3686.

There is a bearish divergence beginning to show on 2H and 6H timeframes. The MACD Histogram is also showing bearish divergence on the 12H timeframe.

Also to note, is that Bitcoin and Ethereum longs are at a very high level, and that is often a very good indicator that a drop is coming; the retail investors are generally wrong.

If this does happen, markets could continue to drop significantly, especially if there is a chain reaction due to stops being hit or liquidations.

Furthermore, current Bitcoin volatility is around 2.33% and has been around this level for the previous two months, and when Bitcoin has a sustained period of low volatility, a significant move often follows-up or down.

From reading the charts, there is a good possibility of BTC breaking the wedge downwards and reaching $3400-3600, and trading in such a range until the next big move.

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