Bitcoin (BTC) has risen sharply in recent months, as the price rose from $ 10,000 to $ 41,500. The rally was in a vertical direction, without any significant corrections between the two.
However, each upward cycle has a standard 30% correction value, and it can be considered beneficial to health.
Bitcoin price started to move south in recent days, dropping 25% to $ 30,000. This decline was also affected by the sudden appreciation of the US dollar, which may reach its lowest levels in recent times.
Bitcoin price drops in time
A trend reversal begins in a shorter period, and its lower end gradually decreases, and this chart is an example of such a reversal in a trend. After several tests, the support lost $ 38,900.
It is not bad in and of itself. However, when the support level turns into descending resistance, it may lead to further downside.
A similar support / resistance reversal occurred in the $ 36300 region, after which the price accelerated its decline to the support areas of $ 32,500 and $ 30,000. Traders and investors alike should remember that bearish corrections always occur in quick and painful moves.
However, the support appears to be at $ 30,000, which could lead to the current construction related to beaches. Such a limited range construction is beneficial for the market as it can boost the next wave of momentum. This shock wave is likely to occur in the latter part of 2021.
The confluence of Fibonacci and the current support level
The 3-day chart shows that interest levels for Bitcoin investors meet. All in all, the previous record $ 20,000 is a good gift for the entire market. However, above this historically high level, other levels will be found and may provide significant support.
These levels correspond to Fibonacci indicators. The first significant support in this area ranges from $ 29,500 to $ 30,500. This is the level at which Bitcoin prices are currently gaining support.
From there, a bounce in relief may occur to $ 35,000 or $ 37,000 before another final drop begins.
Given this is the next Fibonacci level, the latest decline might be close to the $ 25000-26000 area.
The recovery of the US dollar indicates a weak market
One day chart for the US currency index (DXY). Source: TradingView
One of the main variables of cryptocurrency and stock market corrections is the strengthening of the US dollar. The Dollar Strength Index (DXY) fell to an important support level and hit a temporary low with a daily bullish divergence.
Since then, the dollar has strengthened, causing other markets to be inversely related to the south.
The first resistance area has been established near the 92 level. This resistance area will automatically mean that other markets can make further corrections.
Final support level of attention
The final level of monitoring for Bitcoin traders is the weekly calendar, which is the 21-week moving average. In 2016 and 2017, bitcoin price relied on this moving average as support throughout its bull market cycle.
In the next few months, a similar test is unlikely to take place, and this test is appropriate for the prospect of a merger before filing a lawsuit. However, investors do not have to worry about the current value of the 21-week moving average. However, this is a lagging indicator, which means that it will rise to the $ 25,000 area in the next few weeks.
This zone would mean a 40% correction in the cryptocurrency market, which also appeared before new highs several times in previous bull market cycles.
The opinions and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and business involves risks. When making the decision, you need to do your own research.