This is a daily analysis by Coindesk analyst and chartered market technician Omkar Godbole.
Bitcoin’s The price recovery following Friday’s crash has been sketchy at best, leaving prices dangerously close to key zone support. The outcome here could set the stage for significant moves.
BTC rallied to $116,000 after Friday’s sharp drop, where prices fell to nearly $105,000 on some exchanges. However, as expectedthe recovery was brief, with prices returning to trade near $110,000 in the middle Bearish signal from the main momentum indicators.
According to the Daily Candlestick Chart, the $107,000 to $110,000 range forms an important support zone, identified by intraday highs from December to January and intraday lows from September. The confluence of these highs and lows suggests both bulls and bears are struggling to assert control over this region, making it a pivotal battleground for the market. Besides, the 200-day Simple Moving Average (SMA) is now located around $107,500.
This raises an important question: What happens if the $107,000-$110,000 zone support fails? A potential breakdown 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 registered on June 22. Below it, the focus will shift to the lower end of the ascending channel, currently seen around $ 82,000.
Warning signs of a possible sell-off
Recent price action within a well-defined bullish channel, drawn by connecting the higher lows from October 2023 and August 2024 with a parallel trend through the March 2024 high, suggests overthinking conditions and scope for a deeper pullback.
The uptrend of Bitcoin since 2023 is almost stable and sustainable, as shown by the price movements contained within a parallel channel sloping at approximately 45 degrees.
In recent weeks, the Bitcoin price has repeatedly topped the upper border of the well-defined channel, which has signaled moments of overbought or overbought conditions. These breakouts signaled moments of oversold or oversold conditions, but were short-lived, with prices quickly pulling back to suggest buyer fatigue.
Thus, a deeper sell-off cannot be ruled out. Note how prices repeatedly failed to establish a sustained foothold above the December-January upper bound. This repeated decline eventually paved the way for a sharp slide, with prices falling around $75,000.
That said, traders need to watch for a bounce from the important $107,000-$110,000 zone support. A strong rebound here, coupled with a quick invalidation of lower highs via a move above $116,000, could set BTC on a path towards challenging its record highs.
