*This is not a Financial advice. Please do your own due diligence as this market is extremely Volatile.
Bitcoin has recently been bullish as it has nearly doubled in value int he past couple of months. I wanted to just provide my interesting take on the market and provide few reasons Bitcoin could make a correction to the price level of anywhere from $5500 to $6200 in the next coming weeks to the next coming months. Keep in mind these moves can take weeks If not months !
I would like to further add that this is an Idea and Not a price prediction. Please do your own due diligence.
Reason 1 : Resistance $7500 – $8200
As you will notice in the chart above that Bitcoin has been rejected twice from Resistance level shown in the ‘Red box’ above which shows signs of potential weakness. However, bitcoin has shrugged such weaknesses in the past and continued it’s bullish trend, nevertheless there is a case to be made.
As you can see in the chart above, this area has a past. It is an important region which where Bitcoin will be tested. It must break this price level convincingly If it wants to continue its bullish trend.
Reason 2 : Bitcoin Divergence and RSI (relative strength index)
As you can see in the chart above, notice that the RSI (relative strength index) which is shown at the bottom continues to make lower highs, while Bitcoin price continues to surge. Bitcoin price in this case is refusing to follow the RSI. This scenario is known as ‘Divergence’ . However, bitcoin has also defied this situation in the past and continued its bullish trend. Nevertheless, this is yet another reason to take note of.
Reason 3: BTC Volume Continues to Trend lower
Finally, BTC Volume is showing signs of cooling off after seeing a massive rise in the past couple of months !
So there you have it, those are my 3 supporting Reasons for a possibility for a BTC correction to the 5k to 6k levels.
Why 5k to 6k ?
So why am I choosing specifically these levels ? As you can see in the above chart, the yellow line represents the 100 day moving average. Bitcoin has consistently held support on this level in the past and and It is quiet unlikely that bitcoin will breach this support level in my view. Nevertheless, anything is possible when it comes to Bitcoin !
There you have it. These are my 3 reasons for a possibility for bitcoin to have a correction in the next week to the next coming months.