Should Bitcoin Traders Stay Bullish if BTC Price Corrects to $7,700?

Bitcoin remains in good shape to retest $10K while a BTC price pullback to as low as $7Ks may provide a good opportunity for buyers.

The price of Bitcoin (BTC), the top-ranked cryptocurrency by market capitalization, is acting inside a narrowing range, still hovering around $9,000. Meanwhile, we’re also seeing a decrease in volume, alongside an increasingly shaky stock market, which is likely to impact Bitcoin as well (read the recent analysis here).

However, would a retrace towards $7,700 be a bad cause for the markets or is it crucial to sustain above $9,000 for any bullish momentum?

Bitcoin holds above $9,000 as crucial support

Traders and investors should recall the summer of 2019. A massive rally occurred for Bitcoin towards$14,000, ending in a retrace to $9,000. In the months after, the price stabilized at that support level for a significant period.

The $9,000-9,300 area has been a substantial level of support where many significant rejections and support tests have already happened.

Currently, the price of Bitcoin is also hovering above this support level. Additionally, there’s still a support level at the $8,250-8,500 area.

On the other hand, the resistance zones are still clear: $10,100-10,500. As the resistance zone has been tested several times in the previous year, another test of this resistance zone should end in a breakout to the upside.

Such a breakout above the resistance would likely trigger acceleration and potentially a move of $1,000 or more.

The 4-hour chart showing a narrower range between $9,200 and $9,600
The 4-hour chart is showing a clear structure in which the $9,600 area is the current resistance zone, while the $9,175-9,225 area is the crucial support level.

Moreover, the price of Bitcoin lost the $9,200 support level earlier in the week, as there’s a wick toward $8,900 shown on the chart. However, this dropdown was short-lived, as the price of Bitcoin bounced back towards $9,600.

The previous support at $9,200 is being confirmed for support, which would suit a continuation of $9,600.

As stated previously in this article, the more often a resistance gets tested, the weaker it becomes as sellers get exhausted. If the price of Bitcoin holds above $9,200, a retest of the $9,600 resistance should occur and most likely end up in a breakout to the upside.

The total market capitalization is still showing a significant increase in volume in recent months while also showing an upward trend since the crash in March.

As that flash crash to $3,600 took the liquidity below the lows, it wouldn’t be surprising to have a continued rally to take the liquidity above the recent highs. These recent highs can be found at $306 billion (which would equal Bitcoin above $10,500).

In general, the green zone and the 100-day and 200-day moving averages (MAs) are crucial. As the total market capitalization is holding above these MAs, the conclusion is drawn that the market is still in bull territory.

A closer view provides some insight into the short-term outlook
As the chart is showing, the support level to hold is the area between $240-245 billion. As long as that level sustains support, further upward momentum is warranted.

However, the chart also shows that the total market capitalization dropped below the level of $265 billion and marked this as resistance.

In the case of a drop, the support level of $240-245 billion has to hold. Otherwise, $215 billion becomes the next level to watch. On the upside, a breakout of $265 billion would warrant further continuation. If the $265 billion level flips for support, $306 billion comes into play.
The bullish scenario for Bitcoin
The bullish scenario is holding up on the $9,200 support level. As long as that level remains support, this scenario can be used as a reference.

If $9,200 holds, then here comes a retest of $9,600. As stated previously, the more often resistance or support gets tested, the weaker it becomes.

In this case, the $9,600 resistance has been tested several times, which would typically lead to a breakout on the upside. The moment that $9,600 breaks, a rally toward $10,000 should be expected.

If that establishes a new range, the price can stabilize for some time again. However, if the bullish scenario plays out, further upward momentum is possible. If the price starts to crawl towards $10,100-10,500, a breakout above the resistance levels becomes increasingly likely.
The $10,500 resistance has been tested several times, which means the price can quickly run to this level once more. If this happens, it wouldn’t be surprising to next see a price of $11,600-12,000 per Bitcoin very quickly.

The bearish scenario is also aligning with the $9,200 support level. As the $9,600 resistance has been tested for some time, the same conclusion can be drawn for the $9,200 support level.
Losing it would warrant substantial downwards momentum in which a sharp drop toward $8,250-8,500 area wouldn’t be unlikely.

A potential trigger for downward continuation is if the price bounces from $8,500 to $9,100 and immediately rejects, confirming more downward potential.

Nevertheless, even if the price of Bitcoin retraces towards the $7,500 area (which is a significant support area and still untested), it’s still bullish on the higher timeframes. Corrections are healthy in markets and should be qualified as potential buy the dip opportunities.

Leave a reply:

Your email address will not be published.

Site Footer