Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
Bitcoin’s correction has lasted for over a week now, with its value shedding by over 7% after touching record levels around $67,000. However, the king coin, at press time, was in the middle of gradual recovery after testing a robust support zone. Much focus would now be on BTC’s next peak. If the price is able to best its previous swing high of $63,733, BTC could be well on its way to bigger landmarks heading into November.
However, a deeper correction lay in its wake should BTC falter on its ascent towards $64,000.
At the time of writing, Bitcoin was trading at $61,000, up by 4% over the last 24 hours.
Bitcoin Daily Chart
Source: BTC/USD, TradingView
The Fibonacci Retracement and Pitchfork tools were combined on BTC’s daily chart to identify potential areas of support. According to the set-ups, BTC was trading at the confluence of the 23.6% Fibonacci level and the Pitchfork’s mid-line, which served as a strong defensive zone.
From here, a daily close above $61,000 would allow BTC to challenge its 25 October high of $63,733. A leg above $64,000 would see BTC best its earlier high and mark and end to its correctional phase. However, failing to close above $64,000 over the coming days will likely result in yet another drawdown.
Should bears cut beneath the 23.6% Fibonacci level, a newer low can be anticipated around the $56,000-level present along the Pitchfork’s lower band. Such an outcome could even expose BTC to a decline towards the 38.2% Fibonacci level.
Reasoning
Now, bulls were preventing the RSI from moving under 45, which meant that BTC’s uptrend was still intact at press time. Even the Directional Movement Index preserved its bullish outlook, despite registering BTC’s recent losses. However, a comeback towards $64,000 cannot be expected till the MACD recovers from a bearish crossover.
Conclusion
An immediate close above $61,000 would be Bitcoin’s first step towards recovery. From there, bulls would eye a close above $64,000 to commence the next upcycle for BTC. In case the price is unable to muster strength above $64,000, expect the next drawdown phase to be severe.
The region close to $56,000 could become a reality in a bearish situation.
