The Bitcoin Price Continues To Dump. Will Support Hold?
Covered:
- The Bears Are Back In Town
- $58,000 Is Strong Bitcoin Support
- If $58,000 Does Not Hold
- The Bottom Line
The Bears Are Back In Town
Just one week ago, the Bitcoin price was sitting at a new all-time high all of $69,000. Since then, we have seen the Bears step in to push the price all the way back down to $58,500, for a drop of over 15%. The majority of that move taking place in just the past 24 hours, pushing below major trendline support, and the 20 day Simple Moving Average (SMA) around the $63,000 level.
Early this morning, the Bulls stepped back in at the 50 day SMA just above $58,000, showing strong support at this level with a Dragonfly Doji candle printing on the hourly chart, showing a long wick to the downside. The subsequent rally up to $61,000 however was short-lived, and we saw a rejection at the 20 SMA (yellow line) on the hourly chart, before seeing the price move back down to test the support at $58,000 for a second time. The Bulls once again responded, sticking in a higher low and pushing back up to make a second attempt at breaking above the 20 SMA on the hourly, and setting up a potential “W” pattern.
At the time of writing, we are once again seeing a rejection at this moving average, failing to close an hourly candle above the yellow line. Now the question becomes: can the bulls continue to push the price higher, or will we see another move down?
$58,000 Is Strong Bitcoin Support
The $58,000 level is of particular interest at the moment. Not only is the 50 day SMA sitting right there, but it is also an important point from a price action perspective. If we zoom out to the weekly view, we can see that this was a peak that Bitcoin came to on February 15th of this year. It is also the point that ultimately led to the 50% drop in price on May 10th when it failed to hold as support. The confluence between the two are synergistically working together to add strength to this line in the sand.
If $58,000 Does Not Hold
If the Bitcoin price falls below the $58,000 level, it seems likely that the Bulls will continue to buy the dip. The most likely scenario being a wick down there, but to see a swift rebound. What is most important is seeing a weekly close above this level, with closing daily candles above it being preferred from a Bullish perspective. If we start to see daily candles closing below this level, a move down towards $50,000 – $53,000 should be expected.
The Bottom Line
Right now, Bitcoin is in a downtrend. But that downtrend is inside of a larger uptrend that recently brought us to new all-time highs. This is Bullish. And there is plenty of room for Bitcoin to fall before it loses its higher high, higher low structure on the macro view. Bitcoin would have to fall below $40,000 before we could say that structure has been broken. That being said, there is a lot of work that has to be done before we see a new all-time high.
The first thing we need is to see the price start closing hourly candles above the 20 SMA on that time frame, which it is once again attempting to do as I write this. If this move continues above $61,500, we could see a “W” pattern breakout on the hourly with a target at about $64,000. A move that would bring us up to test the 20 Day SMA, where we should expect resistance. If we start seeing daily candle closing above that level, it would be safe to say the Bulls are back in control.
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Text source: CryptosRus
