This is a daily analysis by CoinDesk analyst and Chartered Market Technician Omkar Godbole.
Bitcoins The price recovery after Friday’s crash has been tepid at best, leaving prices dangerously close to the key support zone. The result here could form the basis for significant features.
BTC rose to $116,000 after Friday’s sharp decline, which saw prices drop to nearly $105,000 on multiple exchanges. But as expected, the recovery was short-lived, with prices falling back to trade near $110,000 amid bearish signals from key momentum indicators.
According to the daily candlestick chart, the $107,000 to $110,000 range constitutes a crucial support zone, identified by intraday highs from December to January and intraday lows from September. The convergence of these highs and lows suggests that both bulls and bears have been fighting to assert control in this region, making it a crucial battleground for the market. Also, the 200-day simple moving average (SMA) is now located around $107,500.
This raises a crucial question: what happens if the $107,000-$110,000 support zone does not hold? A potential split would indicate that sellers have gained the upper hand, exposing bitcoin to a deeper selloff.
The first line of support in that case could be $98,330, the swing low recorded on June 22. Below that, focus will shift to the lower end of the ascending channel, which is currently seen at around $82,000.
Warning sign of possible divestment
Recent price action within a well-defined bullish channel, drawn by connecting the higher lows of October 2023 and August 2024 with a parallel trend line through the March 2024 high, suggests overbought conditions and the possibility of a deeper pullback.
Bitcoin’s upward trend since 2023 has been mostly stable and sustainable, as shown by price movements contained in a parallel channel inclined at approximately 45 degrees.
In recent weeks, bitcoin’s price has repeatedly topped the upper limit of the well-defined channel, signaling moments of overbought or overbought conditions. These breakouts signaled moments of overbought or overbought conditions, but have been short-lived, with prices quickly falling back, suggesting buyer exhaustion.
A deeper divestment cannot therefore be ruled out. Note how prices repeatedly failed to establish a sustained foothold above the upper bound in December-January. This repeated rejection eventually paved the way for a sharp slide, with prices falling to around $75,000.
That said, traders should look for a rejection point from the crucial $107,000-$110,000 support zone. A strong rebound here, coupled with a quick invalidation of lower highs through a move above $116,000, could put BTC on a path to challenging its all-time highs.
