Bitcoin (BTC) Correction Intensifies Despite Fed's Upbeat Rate Cut Outlook

Despite a $5,000 $BTC surge as Fed Chairman Jerome Powell intimated in his Jackson Hole speech that he would likely cut rates in September, Bitcoin has since dropped back again and is currently in the process of losing major support. Can Bitcoin rebound from $111,000, or could the major support at $109,000 arrest this slide?

A short respite before $BTC plunges again

During and after Federal Reserve Chairman Jerome Powell’s speech on Friday all was looking good for Bitcoin. Having come down to the $112,000 area things were looking dicey for the number one cryptocurrency. However, Powell’s speech was suitably dovish for the markets and Bitcoin rose sharply to leave the danger zone well behind.

Notwithstanding, one short weekend later and the $BTC price is not only back to the danger areas, it is falling through them.

The next $BTC bounce incoming?

Source: TradingView

As can be seen in the 8-hour chart above, the $BTC price has dropped as far as $110,650, although a couple of candle wicks to the downside might now foretell a bounce. If the price does continue its descent, $109,000 is a major horizontal support level below that would hopefully stop any further rot.

The Stochastic RSI at the bottom of the chart has its indicators close to the bottom of their range. The 12-hour indicator lines are also on their way down. In fact, it could be taken that this further descent for Bitcoin has helped to reset this momentum indicator, and therefore the next bounce could be more resilient.

A shallow retracement?

Source: TradingView

The daily chart for the $BTC price reveals how the Fibonacci extension levels taken from the April bottom to the August top are being fairly well respected by price action. It can be observed that if there is a bounce from the current 0.236 level, this is in fact the shallowest of the Fibonacci levels, and if the price continues upwards, this will have been a very bullish retracement indeed.

At the bottom of the chart, the RSI indicator is coming down again to the band of support from 43.00 down to 40.00. It can be seen that the previous times the indicator came down to this support, or just under, it resulted in a bounce that was reflected in the price action.

Inverse head and shoulders pattern about to be invalidated?

Source: TradingView

The weekly chart for the $BTC price suggests that unless there is some very positive price action into the rest of the day, the inverse head and shoulders pattern could well be invalidated. That said, the price is currently holding above the $112,000 horizontal support level again after looking as though it was going to fall through.

Weekly Stochastic RSI indicators resetting

At the bottom of the chart, the long-feared descent to the bottom of their range is taking place for the Stochastic RSI indicators. Now that we are actually here, as long as the price action does not collapse, this Stochastic RSI reset of the indicators has been tolerated incredibly well so far. There is still a way to go for the indicators to reach the bottom and angle back up, but if the price holds, they could signal the next upward leg of this bull market.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.