A correction that began on Tuesday and reached a bottom on Thursday wiped nearly $6,400 from Bitcoin and sent the price crashing down through the bottom of its bull flag. The big $83K horizontal level is just overhead. Can the bulls turn this back into support, or could a rejection send the price down further?
$BTC price approaches key resistance
Source: TradingView
If the bulls can push the $BTC price back above the $83K horizontal resistance level the rally is back on. However, if this resistance proves too stiff more downside could be on the way. So far the bounce has been a strong one, and if this momentum holds, the price could climb safely back inside the bull flag with no harm done.
A possible concern is the momentum. The 4-hour Stochastic RSI indicators are climbing steadily and could be at their top limit by later today. This still gives plenty of time for the $BTC price to push through the resistance. That said, if there is another retest of the flag bottom and some sideways chop, the momentum can dissipate, making a rejection more likely.
Also, traders will need to keep an eye on bond yields. The U.S. 10-year bond yield is up 0.10% this morning - not a lot, but this can change rapidly. A very bullish indication is the S&P 500 futures. This is up 0.43% so far on Friday, so if this holds until the open later today, the U.S. stock market could be climbing, potentially passing on bullish sentiment to the crypto market.
Daily Stochastic RSI reaching its bottom limit
Source: TradingView
As expected, the 50-day SMA was able to throw its weight behind the support at $80,300, and it looks as though it successfully supported the $BTC price when it met it.
One thing that this latest correction accomplished was that the momentum indicators in all the shorter term time frames were able to reset. Also, it can be seen that the daily Stochastic RSI indicators are nearly at the bottom. These are more important indicators given that the time frame is higher.
If one looks left at the last two times the daily Stochastic RSI indicators rose from their bottom limit, it can be seen that they signalled two big rallies to the upside. That’s not to say that this will be the case this time, but even looking back at the three rises previous to that, the Stochastic RSI signalled rallies of 5%, 15%, and 13%. If the $BTC price is around $83K when the Stochastic RSI indicators start to rise again, just a 5% move would see the price break out of the top of the bull flag.
Bitcoin bulls still in charge
Source: TradingView
In the weekly time frame the $83K horizontal level is still a support level, given that for this level to become resistance the next candle would have to close below this line in order to confirm the breakdown.
At the bottom of the chart, the RSI illustrates the downtrend line that was broken after two and a half years. The indicator line is coming back to the trendline. If it bounces back up after a potential confirmation of the breakout, the rally can continue. The Bitcoin bulls are still in charge.
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.
Source: Crypto Daily