Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
CNBC host Jim Cramer was in the news recently after he advised investors to be “patient” with Bitcoin’s price as more bearishness lay ahead for the market leader. A look at the cryptocurrency’s charts suggested that there might be some truth to it, with the king coin indeed threatening to drop to lower levels. However, it could find safe haven between the strong support zone of $30-33K.
Bitcoin Daily Chart
Source: BTC/USD, TradingView
A look at BTC’s daily chart showed the formation of a descending channel since the 19 May crypto sell-off. Its price formed lower highs at $42,000, $39,000, and $38,000 followed by lower supports as well. As BTC moved south from the upper trendline of the pattern, its next dip would likely drag the digital asset back to the strong defensive zone between $30-33K – A region that cushioned BTC’s gradual decline from $65,000.
From this point onwards, two outcomes are possible. A favorable outcome would see the market leader bounce back from its critical support and break north from its pattern. January highs of $42,000 can be set as the first crucial target for a bullish comeback. On the other hand, a breakdown could trigger another 20% retracement as little to no defensive lines lay between BTC’s descent towards its mid-December highs of $24,000.
Reasoning
The Relative Strength Index has been on a downtrend since January, an indication of weakness despite a prior bull market. However, as the RSI approached its final leg south, a reset was in order. In fact, the MACD was already in recovery mode as the fast-moving line maintained itself above the Signal line.
Moreover, the Awesome Oscillator formed three lower peaks as bullish momentum was on the up. These signs pointed to an impending resurgence, one that could be triggered within BTC’s crucial support zone between $30-33K.
Conclusion
Bitcoin’s movement over the coming days would likely dictate its long-term trajectory. A bounce back from $30-33K could result in a descending channel breakout – Something that would see BTC head back towards the $42K mark. Its indicators also backed such an outcome. If bearish sentiment were to prevail, the price could drop as low as $24,000, a development that would likely mean an extended bear market.
