After failing to surmount $13,000 yesterday, very near local highs of just under $14k, Bitcoin (BTC) has dumped as much as 15% of the course of the last 20 hours - but seems to be making an effort to stabilize at the breakout zone from July 8.
It was only a couple of days ago that Bitcoin broke out and up through $12k, and this is the area currently being retested.
Looking below at the 4-hour chart, there are many things to note. The rising wedge pattern played out perfectly, it is worth noting, breaking down after stiff rejection at $13k. Price is being held, at time of writing, at the downtrend line of the previous consolidation structure (marked).
We can see that strong buying came in around $11.2k. Although this drop seems abrupt, holding this level - essentially a multi-day retest of a breakout zone - could be quite bullish in the medium and long term. This is especially true given Bitcoin’s strong indicators on the weekly chart after last week’s close.
If this area doesn’t hold, however, we may have a deeper correction at hand. Strong support waits at $11,000, and the 200 exponential moving average (EMA) - a level which has so far essentially not been broken during the 2019 bull market - should catch any wicks down below that level.
Considering the general Bitcoin uptrend (“the trend is your friend”), these levels seem likely to hold.
Looking at a fairly naked daily chart, we can see that price has been stopped so far exactly at the 21 EMA; and that the 33 EMA, below (roughly equivalent to the 200 EMA on the 4-hour chart), stands ready to catch any deep wicks.
Moving to the daily indicators, we’ll notice that RSI after this dump is entering the block of support from the entire 2019 period so far. Only after losing this entire area would we really need to worry about medium and long trend changes. We might also notice that today’s histogram bar (marked) looks pretty out of place - and we might take this as a suggestion that it will close much higher today.
All in all, there is no reason yet to think this correction will break the uptrend - there are a couple of levels yet to break before we can start thinking this way.
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