Bitcoin (BTC) Starts Recovery Amid Fearful Market: Price Analysis

The $BTC price fell to nearly $111,000 on Wednesday before a bounce finally arrived. In the midst of fearful sentiment, will this bounce be enough to begin taking Bitcoin back to the August all-time high, or is this just a false rally with $BTC soon to be rejected?

Is the correction deep enough?

The market is watching with bated breath as a potential Bitcoin recovery begins. Was the dip to $111,160 enough of a correction? A 5.8% dip does not sound like a big reversal. Was it enough to shake out the majority of the weak hands? As the rest of this week unfolds the Bitcoin bull market direction may become clearer.

$BTC heads back up to the $113,000 horizontal resistance

Source: TradingView

The short-term time frame for the $BTC price illustrates the correction so far. The $113,000 horizontal resistance is what needs to be broken and held above at the very least, if this bounce is going to come to anything. As it stands, the price is still heading towards this battle zone. The bulls will be hoping that there will be enough momentum in the tank to reach this critical level and also hold above. The Stochastic RSI at the bottom of the chart shows the indicators have risen just above the mid-point, so there would hopefully be sufficient upside price momentum to achieve this first crucial target.

If the price is rejected, the horizontal support levels at around $109,000 and $108,000 would need to hold the price. $108,000 is especially significant, as this level is the last before market structure breaks.

A local bottom, or more downside still to come?

Source: TradingView

The daily chart view has the critical horizontal resistance a bit further down at $112,600, which is precisely where the $BTC price has stopped its rise up till now. It can also be seen that this level lies exactly at the 0.5 Fibonacci on the way down. The 0.618 Fibonacci level is where the correction was checked, and where this bounce began.

At the bottom of the chart, the Stochastic RSI indicators are approaching the very bottom of their range. If one looks left at the times when these indicators rose from the bottom, it can be seen how big the corresponding price rises were, although the actual bottoming process was where the biggest downside occurred.

A shallow macro correction so far, but further downside breaks market structure

Source: TradingView

The weekly chart for the $BTC price gives an even better perspective. On this chart, the $112,600 horizontal level is actually support. Also, drawing Fibonacci levels from the $74,400 local bottom, up to the $124,000 all-time high, places the 0.236 Fibonacci more or less where the price is now. Even the $107,280 local bottom for the current correction is still quite a way short of the 0.382 Fibonacci level at $105,000, so in fact, the correction from the top is very shallow so far. The 0.618 Fibonacci is at $93,000.

The bottom of the chart shows the Stochastic RSI indicators are starting to angle sideways. If the blue indicator line dips below the orange indicator line at the end of this week this would signal trouble ahead, and more downside for Bitcoin. 

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.