The Bitcoin price rose as far as $84,280 early on Monday before sinking back to $83,700. Is this just a pause in the general upward trend for the $BTC price, or is a correctional leg starting that could take Bitcoin back to the firm support at $83K and possibly lower?
$BTC price stalls and moves back to support
Source: TradingView
In the very short-term 1-hour time frame it can be seen that after reentering the channel and confirming the bottom as support once again, the $BTC price meandered up before forming a likely bull flag. However, upon breaking out of the top of this flag and looking like a confirmation of the breakout had taken place, the bears had other ideas and dragged the price back into the flag.
Just approaching support now, it remains to be seen if this support will inspire a bounce, or if the price will break down further for a retest of the important $83K horizontal level. There is also the possibility that the flag comes back into play again, whether that’s with a breakout to the upside or to the downside.
Still bullish, but beware another sharp correction
Source: TradingView
While Bitcoin is still maintaining a bullish structure as the $BTC price continues to go sideways and consolidates, the eventual breakout direction is probably to the upside. However, a good dose of bearishness needs to be in the mix as well, at least for the short to medium term.
The structure which the price is chopping around within has only made lower highs and lower lows since it started to form. Ok, many will say that this is what bull flags do, and that is perfectly correct. Be that as it may, it is very important that the $BTC price does not roll over again and produce yet another lower low, taking the price completely out of the flag once again. If any kind of decent momentum gets behind this correction and the previous local low is passed to the downside, this correction could become the first big one of the bull market, taking the price down to the low $70K area.
The 50-day simple moving average (SMA) is likely to continue to provide support, but when the price is not going straight up, there will be times when it will fall down through this moving average. This is what an average is, so if a decent sized bear flag was to form, the average would probably run through the middle of it, with the price chopping up through and down below it.
A comparison of two bear markets
Source: TradingView
It’s very revealing to compare the 2022/2023 bear market to the one we have just experienced. Many on social media have made an issue of what is perceived to be the shortness of the bear market that has just finished (if indeed it has). The 2022/2023 bear market stretched for 378 days, while the most recent one was 266 days to the absolute low at $57,700.
Structurally, the two bear markets look almost identical. However, look at the downtrend angle. It is a fair bit sharper in the most recent bear market. Also, the angle of the bear flags is much more pronounced to the upside. It seems that the $BTC price came down much quicker, so therefore this may be why the price has risen so explosively.
This said, when the first decent correction does happen in this particular bull market, it may be in the form of a relatively stronger impulse to the downside than usual. Be that as it may, the current rally may not be over quite yet.
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