Bitcoin price struggled to hold support of $ 9,500 to prevent a trend reversal

On February 20, the price of Bitcoin (BTC) unexpectedly fell by 8.85% – a move that made many investors shaky after a good recovery from last week's correction and are trading sideways within the range. 10,200 USD. Citing data from CoinMetrics, ARK Invest's crypto analyst Yassine Elmandjra tweeted that this $ 1,000 price drop is the fifth largest USD correction that has occurred in the hourly time frame since 2017.

Hourly change of Bitcoin price

After a sharp price drop, analysts, traders and cryptocurrencies on Twitter tried to determine the cause of this flash cash issue and a number of hypotheses were made. Some have blamed the major volatility due to the unexpected maintenance that Binance exchange did not plan – suspending trading and preventing many traders from logging into their accounts.

While others, such as the regular analyst for CoinTelegraph filbfilb, have speculated that the lack of Tether (USDT) at Binance could be a factor contributing to the current wave of correction in the market.

In his Telegram trading channel, filbfilb explained that the lack of USDT could indicate that most traders are in the Long position, an observation that is further supported by the declining pace of Bitcoin momentum and the liquidation. 120 million USD of Long leverage on BitMEX.

Liquidate XBT / USD on BitMEX. Source: Skew.com
Liquidate XBT / USD on BitMEX. Source: Skew.com

Regardless of the record, a drop to $ 9,346 has knocked many investors out of their Bitcoin and altcoin positions, and the current state of the market is negatively affecting the bullish sentiment. investors when they choose to wait until there is a clearer signal that a bottom has been established.

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Index of fear and greed in cryptocurrencies. Source: Alternative.me
Index of fear and greed in cryptocurrencies. Source: Alternative.me

Is current price action an opportunity to “buy the dip” or is Bitcoin on the verge of a major trend change? Check out the charts below.

Excited traders told me to get to the top of the tweezers

Daily chart of BTC / USD. Source: TradingView
Daily chart of BTC / USD. Source: TradingView

As seen in the daily chart, Bitcoin has formed a tweezer top candle pattern at $ 10,250 after recovering from a drop to $ 9,450 last weekend. This is probably a signal that a pullback is probable, but traders can feel bullish after a quick rally from Bitcoin's $ 9,450 – bringing top digital assets back on the sidelines. critical support level.

Beside the shock from yesterday's price drop, Bitcoin price is still finding support at the high volume node of the VPVR indicator at $ 9,300 to $ 9,438. While it is reassuring to traders, a number of cautionary notes are low buying volumes – notably the lack of buyers interested in entering the current market and the state of the two oscillations. The most frequently referenced by traders has not noted the oversold condition.

6-hour chart of BTC / USD. Source: TradingView
6-hour chart of BTC / USD. Source: TradingView

On the 6-hour chart, the relative strength index (RSI) has not been able to control oversold bounce (the term price index usually rises quickly after a severe decline) and the Moving Average Convergence Divergence Line (MACD) ) continues to plummet, shrinking to near -100 at the time of writing.

Traders will also notice that the MACD histograms continue to extend in the negative zone (below zero) and the pattern of lower highs in the 6-hour chart has not been broken.

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Bearish script (discounts) for Bitcoin

If the bulls continue to believe that the current price action is not an “buy the dip” opportunity, then the price could fall below the high volume VPVR node ($ 9,438) and the 200-day moving average at $ 8,800. – where there is another high volume VPVR node.

A shorter time frame indicated that the price gradually created a higher low, but the buying volume was not strong enough to keep the price above $ 9,600. In the short term, the bulls need to defend the support of $ 9,500 (the black arrow on the chart below) because the daily and weekly time frames show it to be an important support. A more serious trend change could see prices drop to $ 8,800 to $ 8,400.

The bullish (bullish) scenario for Bitcoin

Taking a broader look to assess Bitcoin's price action since peaking at 2019 at $ 13,800 on June 26, we can see that the 38.2% Fib retracement level has been a frequently populated area. up after strong adjustment.

Daily chart of BTC / USD. Source: TradingView
Daily chart of BTC / USD. Source: TradingView

Since June 26, 2018, the price has rebounded here more than 10 times and yesterday's pullback has brought the price back to the 38.6% Fib retracement level again. It is important that the price stays above this level as the 38.6% Fib retracement level also acts as a strong resistance when the price drops below that.

On the other hand, assuming a breakout price, we can also see that the three most recent Bitcoin protests on October 12, 2019, February 12, 2020 and February 18, 2020 failed to break through. Fib 50% retracement level. Therefore, the Bitcoin price needs to ensure a few daily closures above $ 10,250 (50% Fib retracement level) before it can seriously consider any rally to $ 11,000.

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In the short term, Bitcoin price needs to erase $ 9,630 and above this price, $ 9,750 is likely to act as a resistance. A more convincing move would be that the price of Bitcoin surpasses the 20-MA of the Bollinger band indicator and sustains above $ 9,850.

Readers can update BTC rates and more than 2,000+ cryptocurrencies in real time here.

Disclaimer: This article is an analysis by cryptocurrency analyst Horus Hughes – a frequent contributor to CoinTelegraph. Readers should only consult, not consider this as an investment advice, especially from Toiyeubitcoin, we will not be responsible for your investment.

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According to CoinTelegraph
Translated by ToiYeuBitcoin

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