Bitcoin (BTC) Nears Bottom again: Where Will It Bounce Back? Price Analysis

Bitcoin’s (BTC) latest rally failed to make a higher high and now the price is heading back to the local bottom at around $107,000. Is this a sign that the bears are now fully in control, or is this just bottoming price action playing out?

One thing is for sure in the Bitcoin price action, and that is the bulls are just not turning up in order to get behind any kind of definitive trend change. Yes, the $BTC price did manage to escape from the descending channel that had been corralling the price down since 15 August, but the breakout was relatively weak, and now the falling price is not that far from the initial breakout level.

$BTC breakout rally rolls over

Source: TradingView

In the 4-hour chart above it can be seen how the $BTC price stopped short of the higher high at around $113,500 and limply and obligingly rolled over. It now remains to be seen how far down this current corrective wave will take the price.

The Fibonacci levels can possibly give some clues as to where this descent will stop. The price is currently battling to hold the 0.382 Fibonacci, but it looks as though this might fail. The most likely levels to stop the rot are lower down, with the 0.618 or the 0.786 being the favourites. If the price falls beyond all of the Fibonacci levels, the top of the descending channel would probably coincide with the $107,000 local bottom and would possibly act as a last ditch support.

The thesis now (until proved otherwise) is that the bottom is probably in, although a further dip to $105,000, or even to $100,000 could really help to shake out any weak hands that are left. 

Back to the thesis, it might be expected that the $BTC price chops sideways from here and that some more price structure is laid down at these levels. The shorter term Stochastic RSI indicators have a fair way to come back down, and as they do so the much more influential weekly Stochastic RSI can continue to find its way to the bottom.

0.618 Fibonacci still perfect support on the daily

Source: TradingView

In the daily time frame it can be observed that the 50 SMA (blue line) is turning over, and the 100 SMA (green line) could be next. Further down, the 200 SMA is continuing to rise, and could act as support in the eventuality that the price falls to this level.

The price has possibly just been rejected for the third time at the 100 SMA, so it is to be wondered if $BTC will come down, at least to the 0.618 Fibonacci level (taken from the entire $98,000 - $124,000 move). 

Fighting off the tendency to be bearish here, the positives are that the $BTC price has broken out of the descending channel, the 0.618 Fibonacci is holding support beautifully, and the Stochastic RSI indicators on this time frame are still climbing.

Important support structures in the weekly time frame

Source: TradingView

Finally, in the weekly time frame we continue the theme of the Fibonacci extension levels. This time the Fibonacci levels are taken from the very top of the 2021 bull market, to the absolute depth of the ensuing bear market. This provides the levels in the chart above. 

It can be seen how accurately the price comes back down to the earlier Fibonacci levels once it has passed one and has risen to the next level. In the current price action it can be noted that if the bears do force the price down from here, it could go all the way back down to retest the 1.618 Fibonacci at $102,000. 

At the same time, the 50-week SMA (blue line) is rising and could also receive a retest once again as it did on a few occasions earlier in this bull market.

This next couple of weeks could give a clearer picture of which way this is going to go. That said, if the price does come down to the region of $102,000 and does retest the 50-week SMA, the resulting bounce could take the $BTC price up towards the 2.618 Fibonacci at $155,000.

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.