Expecting another corrective bearish leg before upside
farhan fazal
BTCUSD·
May 23 2023
Stop Loss -5.25%
Holding time 23d16hr
27970.60
Entry price
29438.60
Stop loss price
Bitcoin price action over the last two months is reminiscent of the moves that occurred between January 20 and March 1. The repeating pattern is termed fractal and can be seen even in the Relative Strength Index (RSI) and Awesome Oscillator (AO) momentum indicators.
If history does repeat, then investors can first expect Bitcoin price to trigger a minor recovery rally to $28,051. This move is ‘scenario one’ and will push BTC to collect the buy-stop liquidity before, as seen in the chart below. After this liquidity run, sellers are likely to take control and catalyze a steep correction, trapping early and greedy bulls on the wrong side.
This confidence suggests that investors are willing to hold on to their assets as potential recovery will bring about profits.
Although some bouts of selling have been observed in the market over the last few months, for the majority of the last 12 months, HODLing has been the primary market dynamic. This is visible in the decline in liveliness.
Bitcoin price is currently trading at $27,319, consolidating between $28,470 and $26,500 for more than ten days now. The decline noted on the charts since mid-April has dragged BTC down from $30,500 to its current price. Interestingly this did not trigger excessive selling among investors, which is a positive sign.
The RSI and AO indicators are perfectly positioned below their respective mean levels for a rejection followed by a pullback. The second leg of scenario one includes Bitcoin price sliding down to tag the support levels at $25,175 and $23,062.
The bullish thesis, or scenario 2 for Bitcoin price, will include BTC invalidating the fractal outlook and flipping the $28,051 hurdle into a support floor. Doing so will pave the way for BTC to tag $30,287.