A gargantuan weekly candle to the downside is currently in formation. Already 18% down for the week, this equates to a loss of $18,000. The $BTC price looks as though it may be losing the 200-day moving average. Where will the buyers start coming back into the market?
Crypto price sentiment continues to tank
For those who have been in the crypto market for a few years, the present tumble in price is par for the course. Even bull markets can experience crashes of 40% to 50%. However, investors new to the market must be thinking that the sky is falling in, and many will be selling, if they have not already done so.
Despite Bitcoin having the crypto-friendliest US administration in history, as far as price goes, it is all doom and gloom. Market sentiment continues to tank. At what price point can this torrent of selling finally be staunched?
$BTC price breaks below the 200-day moving average
Source: TradingView
With such a devastating price plunge currently still playing out, it is useless to look at any of the shorter term price charts. Starting off on the daily, it can be seen that the price has broken down through the 200-day SMA, which would normally be a line that the vast majority of the bull market price would stay above.
The Fibonacci levels, drawn from the very bottom wick out of the 8-month long bull flag, up to the all-time high, have been acting as a reliable magnet for the price so far.
Currently at the 5.0 Fibonacci, the price is pausing while the previous big moves down are absorbed by the market. It does look rather like the drop might continue, given that there is a confluence below with the 0.618 Fibonacci, and the extremely strong support level formed by the top of the bull flag.
Three main levels of support
Source: TradingView
The above weekly chart shows that there are three main levels of support under the $BTC price right now. The first level of support is a little perfunctory at $80,000, but it is also the level of the 5.0 Fibonacci, so the price could bounce here.
Below this is the $74,000 level of the very top of the bull flag. A confirmation here before turning back around could also be a very valid move. That said, the strongest, and perhaps more likely level to come down to would be the $69,000 horizontal support level. This not only marks the top of most of the candle bodies in the bull flag, but it also marks the very top of the 2021 bull market. This would mark a 37% retracement from the top, and a very, very healthy retest for the bull market going forward. One further factor to add to this last scenario is that the M topping pattern has a measured move down to $70,000.
Will the price get down to either of these last two lower levels? Nobody knows. These are just two scenarios to be added to the one where the price stops falling right now and heads back up.
What is clear is that none of these scenarios point to a bear market. It’s all about the formation of healthy price structure, ready for the next stage of the bull market to be built on top of it.
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.
