This is daily analysis from CoinDesk analyst and certified market technician Omkar Godbole.
Bitcoin The price recovery from Friday’s crash has been tepid at best, leaving prices dangerously close to the key support zone. The result here could pave the way for meaningful action.
BTC rebounded to $116,000 after Friday’s sharp decline, during which prices fell to near $105,000 on several exchanges. However, as expected, the recovery was brief, with prices falling back to near $110,000 due to bearish signals from major momentum indicators.
According to the daily candlestick chart, the $107,000 to $110,000 range forms a crucial support zone, identified by the December-January intraday highs and September intraday lows. The convergence of these highs and lows suggests that bulls and bears have struggled to assert control in this region, making it a crucial battleground for the market. Additionally, the 200-day simple moving average (SMA) now stands at around $107,500.
This raises a crucial question: what happens if the $107,000-$110,000 support zone doesn’t hold? A potential breakdown would indicate that sellers have gained the upper hand, exposing bitcoin to further selling.
In this case, the first support line could be $98,330, the low recorded on June 22. Below, attention would shift to the lower end of the ascending channel, currently seen at around $82,000.
Warning signs of a possible sale
Recent price action within a well-defined upward channel, drawn by connecting the October 2023 and August 2024 high lows with a parallel trendline through the March 2024 high, suggests overbought conditions and the possibility of a deeper pullback.
Bitcoin’s uptrend since 2023 has been generally stable and durable, as shown by price movements contained within a parallel channel inclined at approximately 45 degrees.
In recent weeks, the price of bitcoin has repeatedly exceeded the upper limit of a well-defined channel, signaling moments of excessive exuberance or overbought conditions. These breakouts signaled moments of overexuberance or overbought conditions, but were short-lived, with prices falling quickly, suggesting buyer exhaustion.
A larger sale cannot therefore be ruled out. Note how prices failed to sustainably settle above the upper boundary in December-January. This repeated rejection eventually paved the way for a sharp decline, with prices falling to around $75,000.
That said, traders should watch for a rebound from the crucial $107,000 to $110,000 support zone. A strong bounce here, coupled with a quick invalidation of lower highs through a move above $116,000, could put BTC on the path to challenge its all-time highs.
