Since Friday’s 7.6% surge in the $BTC price, investors and traders were possibly disappointed to see this positive price action lose momentum over the following days. However, this is a completely normal retracement, and Bitcoin is likely to rebound soon.
A perfectly healthy correction
No asset just goes straight up. The latest price action from Bitcoin is par for the course, and a very healthy way for the king of the cryptocurrencies to eventually get back to the all-time high.
The upward surge that the $BTC price experienced on Friday was a large one, the 7.6% rise equated to a gain of nearly $4,500, which is still being absorbed. Once this process is finished, it might be expected that $BTC will continue the current upward trend.
Renewed momentum should encourage a bounce
Source: TradingView
Looking at the immediate price action for Bitcoin, it can be seen that after getting rejected from $65,000, the price has rolled over and is heading back towards the top of the ascending triangle. This would be a great place for a bounce, with the chance perhaps of a wick down to the big $61,000 horizontal support level.
The Stochastic RSI (momentum) has bottomed on this time frame, and is also doing the same on the 8-hour chart. Therefore upside momentum is likely to come back into the $BTC price soon.
Strong support
Source: TradingView
In the macro, weekly time frame, the importance of the horizontal support at $61,000 can be appreciated. This level is also underpinned by the 0.382 fibonacci, which is just below. While a bounce might happen from the current area of support, a move down to the main support level at $61,000 should not be discounted. It can also be seen how perfectly the 0.618 fibonacci lines up with the support at $52,000.
RSI downward trend must be broken
Looking at the bottom of the chart, the Relative Strength Index (RSI) is showing that the indicator has respected a downward trend which stretches all the way back to just before the all-time high. This needs to be broken. This weekly close will be crucial to see whether the indicator line finishes above or below the trend line. If it is above, the downward trend can start to be reversed, but if it is below, this particular rally may well be cut short.
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.
