Hello everyone, I would like to talk about my short term technical analysis for Bitcoin. Due to recent price action there's a lot of volatility and downside ever since we broke 9,000 USD which was a psychologically strong support and ever since every single support that is found is broken. I haven't been able to update the price ever since I made an analysis while we where holding a tight range around 8,900 and 9,400 so a lot has happened ever since and the result now is a market with the sentiment completely flipped to full bear. So lets jump right into the analysis so we can get a better understanding of the market situation and why this price action signals short term downside but long term neutral sentiment.
As I mentioned, around 8,900 and 9,000 was a critical range for the previous spike to 10,600. This range served as a bouncing area after that huge spike on October 26th so once we pierced 9,000 there was really no bottom until the 200 blue EMA at around 8,700. That was critical long term support and over the course of one week that critical support was broken and we 100% retraced the move from late October. This is definitely not a good situation because bullish price was engulfed by bearish action in an almost symmetrical way bringing back the death cross drama we all thought we were over already. We are back again below the 200 daily EMA which is not good at all. In my opinion based on the analysis so far, I would expect a bounce here around the 7,400 and 7,500 area because the bounce will further contribute to confuse the market thinking is definite support or an area to keep falling but for this a bounce needs to happen so this area is delicate to me, I would try to take advantage of the short term volatility and buy dips here but as some people would call it, that might be risky because you could be catching a falling knife. How do we know what speculation is right or wrong? Lets further analyze the chart with some fib and RSI levels.
Fib levels where established when price touched 3,100 and when it peaked at 13,900. Then, we can see that our strongest support was at the 50% fib retracement level at around 8,600 and our 200 EMA was sitting at 8,700 so that range was crucial to hold to prevent further price bleed. Now the next important area is 7,200-7,300. That's critical support now and we are like 6.5% percent away from touching those levels. I would be setting buy orders around there if we get to touch it. If we don't because as we can see, the RSI is touching oversold levels, then we could be bouncing from this 7,500 area and test higher prices. I don't think that oversold RSI levels should be considered as a buy signal in this situation because you can see how we barely touch or cross the middle area either trend the market is in. If it's bullish, the RSI barely touches or falls below 50 and constantly pierces through oversold territory. When it's in a downtrend, price is rejected every time it touches an oversold level and also constantly pierces oversold levels so we can see how price is still downtrending with the RSI and we are seeing how the downtrend could potentially start downtrending with the EMAs.
So in summary, I wouldn't expect for the short term to have a big surge in price. Due to the failed upwards price action from the latest move, it would be wise to set buy orders around this area, and just to be much more comfortable with a position, wait until 7,200 and 7,300. Then, I expect a tense range around this area 7-8k because when we consider the long term price action, hitting 20,000 USD was a little overwhelming and so the market has been cooling down ever since, until this year where we jumped to 13,900. So you can think of the drop to 3,000 and jump to 13,900 as overreactions to the downside and upside respectively. Now is where the price will find middle ground and consolidate strong ranges.
Let me know if this analysis was useful in the comments and if you would like to add anything don't hesitate to do so :) Thank you for reading and have a nice day everyone!