Bitcoin Tests $76K Support: Next Rally Do or Die for the Bulls?

Even while in a fairly oversold condition, the bears were still able to drag the $BTC price further down, which ended with a touch of the $76K horizontal support level. Back now at $77K, the Bitcoin bulls possibly have one more chance to break back into a descending channel, although with very heavy resistance around $80K a damaging lower high may be the eventual outcome. 

Rally phase not going anywhere yet

Source: TradingView

Even in the short-term chart view one can appreciate the potential danger that the $BTC price is in right now. To start with, the price has fallen well below the major $80K horizontal resistance and a good way back inside the bear flag. Chopping around inside a descending channel for a while, the price then fell out of this, dropping through the 200 SMA as it did so.

The Stochastic RSI indicator lines are supposed to be signalling short-term upside momentum for a rally phase, but the indicator lines are getting nearer the top and the rally has not really even begun. There is still time, given that the 8-hour, 12-hour, and daily Stochastic RSI indicator lines are at their bottoms, but the bulls need to show much more urgency if they are to get out of this current predicament.

A lower high a foregone conclusion?

Source: TradingView

Viewing the $BTC price in the daily chart we can see that the bulls are still struggling to arrest the slide out of the descending channel/bull flag. It appears that they may have been successful, as the dip down to $76,000 left a decent-length candle tail behind it. As already mentioned, the Stochastic RSI indicators could soon signal some upside price momentum.

At the bottom of the chart the RSI indicator is not a good look. Having fallen out of the ascending channel, the indicator line has fallen a good way, although the line may be about to angle back up.

A bullish phase needs to take place, and it needs to take place soon. At the very least the bulls need to push the price back into the small bull flag and preferably back above the $78,700 resistance. That said, if the bulls cannot lift the price back to the major resistance level and above, this will just be another lower high.

Bitcoin heading down to a bottom in the low to mid $60K range

Source: TradingView

The weekly time frame shows us a very interesting view indeed. Firstly, it should be noted that the current bear market is acting in a rather similar manner to the previous one in 2022. 

The $BTC price was suppressed below a long descending trendline each time. That trendline was tested twice, and each time this was via a bear flag. The second time, the price broke through and eventually started to head back up into the next bull market.

However, when the price broke through, it rose around 12 to 14%, before falling back down to retest and confirm the breakout beyond the bear market trendline (green arrow).

Zoom forward to today, and more or less the same pattern has played out. The price is at the stage where it has broken out and has risen higher with the impetus of the breakout. Is the price about to come all the way back now and retest the bear market trendline?

In 2022 the fall back to the trendline was around 25%. If we measure this from the top of the last high at $83,000, the 25% drop would take the price down to $62,000.

One more thing, and this is very thought-provoking. If one draws a trendline through the tops of both bull markets, and then slides that trendline down in parallel, it perfectly touches the bottom in September 2023 and also the recent $60,000 bottom. It would appear that the price is inside of a huge ascending channel. Look at how the 200-week simple moving average is moving in concert with the lower trendline. Wouldn’t this then suggest that $60,000 was indeed the bottom?

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.