Bitcoin price is currently facing a correction that has caused the crypto asset to drop a whopping 20% in the past 24 to 48 hours. This drop has caused liquidation worth more than $2 billion. At press time, bitcoin is testing the support at $33,900 while also being in a state of limbo.
Bitcoin 4-hour chart
Source: BTCUSD Trading View
The 4-hour chart shows the recent drop came after bitcoin broke the support at $38,633. Since this breach, the sellers have managed to push bitcoin past the short-length EMA [orange] and the mid-length EMA [purple]. While the selling pressure has reduced, the price is using the long-length EMA [blue] as support. A bounce from this level is likely, however, not guaranteed.
Considering the overhead resistance, it is not completely unlikely for buyers to push through the short and mid-length EMAs. However, a rejection here would push the price down.
The RSI indicator seems to indicate the bounce just before the oversold zone confirming the buying pressure at the current support level. Moreover, the bullish divergence between the price and RSI shows that buyers might not just be able to hold this level, but even push the price higher.
The OBV doesn’t show a large volume drop off during the recent crash, indicating that a recovery is likely to be swift.
The MACD indicator showed a dip of the fast-moving line [blue] below the zero-level. The same was observed with the Stochastic indicator which has multiple failed reversals in the oversold zone, where it still stands.
Conclusion
Although it looks bearish, the surge in bitcoin’s price in the last few days is not just FOMO but backed by real investors pumping cash. Hence, even with the parabolic ascent in price, this recent crash is just a correction with prices expected to rise higher without any doubt.
