Heavily oversold now in the shorter time frames, has the $BTC price just made a bottom with a quick dip down to $61K, or is the extremely poor market sentiment going to push the price down to the previous bottom at $60K?
Bull market trendline is retested
Source: TradingView
Since plummeting down through the bottom trendline of the large bear flag, the $BTC price has fallen 15.8%, or $11,500 in US dollar terms. After a candle tail quickly came down to tag $61,300, the price rose back up again and has settled at just under $64,000. That tail also tagged a major line in the form of the bull market trendline. With this last major trendline coming into play, the $BTC price really must be coming to a bottom.
If the price is able to bounce from here, and that is debatable considering the awful market sentiment, $66K will be the major barrier to cross now that it has become resistance. The small trendline that has developed since the price fell out of the bear flag would be the key to any short-term trend change back to the upside.
To the downside, a revisit of the bull market trendline could be a next move. If this didn’t hold, a drop to the $60K support, a possible lower low, and a confirmation of the bull market trendline as resistance could all strike terror into the hearts of the bulls.
A relief bounce the more probable outcome?
Source: TradingView
In normal circumstances, with an asset as mainstream as Bitcoin, the daily chart above would probably suggest a strong buy, even if this was only for a relief rally. The long tail underneath the current candle, the dip down to test the bull market trendline, the potential for a double bottom, the RSI indicator at a very oversold level – all would appear to be signalling a reversal back to the upside.
Nevertheless, with such a filthy market sentiment, even such an obvious setup must be approached with caution. But yes, a bounce is the more probable outcome from here. Be that as it may, this bounce might only succeed in getting back to test and confirm $66,000 as resistance, while getting all the way back to test the underside of the bear flag is doable, but a real outside bet.
The final leg of the bear market
Source: TradingView
The weekly chart puts a great perfect perspective onto the overall picture. Firstly, it can be seen that the bull market and bear market trendlines are converging. While the $BTC price has come down to retest the bull market trendline, and incidentally the 200-week SMA, it is also quite near to what would be a very important retest of the bear market trendline. If the bear market trendline did get a retest, that would be a very convincing sign that the bottom was either in, or very near. If a retest took place this week, it would be at a price of around $57,000.
At the bottom of the chart, the Stochastic RSI indicators are heading down fast. Another 4 or 5 weeks could see them at their lower limit again. The MACD is also posturing to the downside. A double dip of the indicator lines is what could be next.
Many investors will be fearful of the current price action for $BTC, and things could get even worse. However, this is possibly the final down leg of this bear market, and it only remains to be seen where the bottom will eventually be. It may not be as low as many think.
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.
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