Bitcoin is still in danger of falling further despite the price just bounced to $ 7200 area
Unfortunately for the Bitcoin bulls, the cryptocurrency market did not start in 2020 with a positive signal. Earlier today, AZCoin News reported that the BTC price fell 3.5% to under $ 7,000 before rebounding to the $ 7200 area at the press time.
Over the past few days, the Bitcoin price has been trading between $ 7,300 and $ 7,100, testing the support level of $ 7,100 to $ 7,050 several times and today BTC finally broke below $ 7000 to slide to $ 6800 for several hours.
Source: Trading View
On the 6-hour chart, the Relative Strength Index (RSI) has fallen into the oversold zone at 30 and the Stochastic RSI has started to cross the zero level so it seems like an overbought has been created.
If BTC can reverse the process, traders will look for the price to reduce losses today. The $7,200 area is home to the Bollinger Band moving average (MA). This is also the level associated with the 61.8% Fib retracement level. Therefore, if the volume condition is met, a short-term trend reversal can occur to $ 7,445 (on the upper Bollinger band).
The $ 6800 level is an important price for Bitcoin and the bulls need to make an effort to maintain it. If this level fails to hold, Bitcoin can gain access to $ 6,550, $ 6,400 and even $ 6,160.
Bitcoin price today. Source: Coinmarketcap
Bitcoin could bounce higher
Despite this bearish action, analysts are confident that BTC is ready to recover.
First, well-known trader Filb Filb posted a chart on Tuesday showing that Bitcoin will retreat to see a wave correction of $ 6,777 in the week.
— fil₿fil₿ (@filbfilb) December 31, 2019
After that correction occurs, it can be seen that a bounce of nearly 15% will bring BTC back to a high of $ 7,000 in mid-January.
Although Filb Filb had incorrectly predicted the day Bitcoin hit $ 6800 but traders have been extremely accurate in predicting the direction of this market in recent months, including an accurate prediction of the potential to bounce to $ 7,500 and a reversal earlier this week.
Bitcoin has sustained above $ 7,000 for several weeks now, the bulls defending this support despite repeatedly facing rejection of around $ 7,500.
Still in danger of falling further
In the short term, it’s a good sign that buyers have been able to absorb enough current selling pressure to prevent the cryptocurrency from falling to the support level it has set at around $ 7,500. However, this support can quickly disappear if the bulls are unable to generate any momentum in the coming hours.
Financial Survivalism analyst recently raised the possibility that BTC is now laying the foundation to form a Wyckoff Spring squad, meaning it will drop to the lower $ 6,000 area before witnessing a major rally.
— Financial Survivalism (@Sawcruhteez) January 2, 2020
According to analyst Moe, based on the Bitcoin price chart and how it applies to the Elliott Wave Theory, the price of Bitcoin completed its final wave 5 at the top of the cryptocurrency bubble back in 2017 and has just finished wave B in the ABC correction wave when Bitcoin reached the top in the 2019 rally in late June.
In theory, the next thing would be the C correction target, significantly lower than the A wave, which bounced from $ 3,100. The accompanying price chart also shows the target of around $ 1,000 – that is the peak of wave 3 on the upside momentum.
— Moe (@Moe_mentum_) January 2, 2020
If Bitcoin breaks below the current bear market bottom and heads towards $ 1,000 as suggested by the Elliott Wave Theory, The cryptocurrency industry will be in turmoil, resulting in many companies and projects going bankrupt.
Disclaimer: This is not trading advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
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