Bitcoin price has leveled out following the long-awaited correction that initiated in early Asian trading on Friday. The thousand dollar drop found support above $7,000 and a new trading range has formed there for now. The big question for traders and those looking for a better entry point is; will BTC fall back to major support above $6,000?
Trending Down Since Thursday
Weekends are usually quiet on crypto markets and Saturday morning’s trading in the Far East has been no exception. Bitcoin price 00 did drop to an intraday low of $7,045, according to Coinmarketcap.com, but recovered back to form the range bound channel at around $7,300.
The next move will be critical and many are secretly willing it to drop further to create better accumulation opportunities.
Crypto trader and self-styled ‘chart psychologist’ Chonis Trading has done the analysis highlighting descending support and resistance lines in the current channel;
$BTC – lower time frame channel holding defined descending suppor and resistance lines…watch for a break of these boundaries to set the next #bitcoin near term trend continuance… pic.twitter.com/YGmc9JA0FX
— Chonis Trading-⚔️ (@BigChonis) May 18, 2019
Looking at that it is clear that a new short term downtrend could be forming as lower lows are being recorded. This reversal started on Thursday when BTC hit its 2019 high of $8,300. Continuation of this channel would see BTC bounce off these resistance points over the coming days.
Most analysts are in agreement that there is huge support in the low $6,000s. So this has become the target on the downside. $6,400 was the most commonly traded price of 2018 so a return there would not be surprising. Bitcoin remained trading in that channel from August to mid-November last year.
Looking at moving averages, the 50 day could come into play and this currently sits around the $5,500 level.
Some are claiming that the drop has caused technical damage in the short term and highlighted the discrepancies and huge spread differentials between different exchanges. Analyst at Forex.com, Fawad Razaqzada, told MarketWatch;
I think the drop has caused a lot of technical damage in the short term and the way it dropped is kind of a reminder that things like that can happen again…
“In fact, bitcoin is looking extremely ‘overbought’ in the short-term. So, for the sake of healthy price action, bitcoin will either need to correct itself or, ideally for the bulls, consolidate for a while before it makes further gains.
BTC Fash Crashes to Low $6K Range But Bounces Back
European crypto exchange Bitstamp attributed the fall to one large BTC sale which impacted the order book creating a cascade effect.
1/2: A large sell order was executed on our BTC/USD pair today, strongly impacting the order book. Our system behaved as designed, processing and fulfilling the client’s order as it was received.
— Bitstamp (@Bitstamp) May 17, 2019
Either way, corrections are natural constituents of market cycles and before Bitcoin can reach new highs, it needs to pullback. The trend this year has been the complete opposite of 2018 and further gains are on the cards.
BTC is just taking a breather at the moment, though it may have further to fall in the short term.