After a 20% gain since halving, a sharp 5% drop in Bitcoin price provided a necessary retest of key support while most buying interest is still further down.
At 2 A.M. (UTC) time Bitcoin (BTC) price abruptly dropped 5.11% to $9,256 before recovering to trade in the $9,500 range. This followed a previous sudden drop on Thursday after BTC briefly touched $10K to fill the CME futures gap.
Crypto market weekly price chart. Source: Coin360
Data from CoinMarketCap shows that earlier in the day the price surged to $9,939 and the following consolidation of higher lows and lower highs convinced some traders that further continuation to $10K and above was in the works.
BTC USDT 1-hour chart. Source: TradingView
After the surge to $9,939, traders were watching to see if $9,650 would function as support and the break below the pennant trendline and 20-MA dropped the price below a high volume node on the volume profile visible range.
BitMEX XBTUSD Liquidations. Source: Skew.com
Data from Skew shows the drop to $9,256 liquidated $28 million in BitMEX long positions but as discussed in a recent analysis, after a more than 20% rally since May 11, Bitcoin price was expected to retest former resistance levels to see if they had truly flipped to support.
The 1-hour chart suggests that a period of consolidation at $9,200-$9,300. At the time of writing the RSI is flat in neutral the neutral zone (50) and the MACD histogram remains negative. The Chaikin Money Flow oscillator also remains below 0 and the price continues to notch lower highs.
Scalpers will note that on the 30-minute chart Bitcoin price is already in the midst of an oversold bounce but sustained purchasing volume will be the indicator that will provide the best signal.
Despite the $500 correction, Bitcoin’s price is still above the ascending trendline from the recent low at $8,200. In the day leading up to and also during the halving, the price dropped to this trendline, and today’s pullback to $9,256 tapped it again.
If the price can hold above $9,300 and work its way back above the 20-MA on the 1-hour chart, bulls will be ready to attempt a push back above $9,600.
BTC USDT 4-hour chart. Source: TradingView
Looking at the 4-hour chart, if Bitcoin price falls below the ascending trendline and fails to find support at $9,200, a drop to the 100-MA at $9,000 is likely.
The VPVR also shows a high volume node at $8,894, which is slightly below the 100-MA, so in the event that the price falls below $9,000, traders will likely look to open positions at this level.
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