Bitcoin recently busted through a descending trend line connecting the latest highs since the start of the year to signal that a reversal from the downtrend is in order.
However, price seems to be in correction mode as it retreats from the $96,231 area and could gather more bullish interest at the Fibonacci retracement levels.
Currently, Bitcoin is inching closer to testing support levels marked by the Fibonacci retracement tool. The 38.2% Fibonacci level at $88,014 could provide near-term support, while a larger correction could find support at the 50% level near $85,476 and the 61.8% level at $82,958.
Technical Indicators Suggest Mixed Signals
The moving averages on the chart provide important insights into the current trend dynamics. The 100 SMA (blue line) is positioned above the 200 SMA (red line), which traditionally suggests that the path of least resistance is to the upside.
These moving averages are also near the Fibonacci retracement levels (50% and 61.8%) to add another layer of dynamic support on dips. Sentiment in the crypto market and safe-haven demand could be crucial in determining whether the trend reversal can gain traction or falter.
The oscillators are painting a mixed picture. The stochastic indicator has been moving from overbought territory and is now declining, suggesting that bearish pressure could be increasing in the near term. This movement aligns with the recent price rejection from higher levels.
Turning higher from the oversold region could suggest that buyers are ready to take over and sustain the bitcoin reversal. On the other hand, prolonged movement in the oversold region could point to sideways price action in the near-term while traders await larger market catalysts.
Meanwhile, the MACD indicator (shown at the bottom of the chart) appears to be showing downward momentum with the blue line crossing below the orange signal line, reinforcing the bearish sentiment.
BTC Price Projections
Looking ahead, Bitcoin faces several critical price levels that could determine its medium-term direction. The immediate resistance at $93,840 will be crucial – a strong break above this level could invalidate the current bearish scenario and potentially trigger a move toward the $96,231 level (0.0% Fibonacci level).
On the downside, should Bitcoin fail to maintain support at the 61.8% Fibonacci level ($82,958), we could see a retest of the recent lows near $74,720. A decisive break below this support could open the door for a deeper correction, potentially targeting the next significant support zones.
The overall market sentiment appears cautiously bearish in the short term, though the longer-term uptrend remains intact as long as the price stays above the ascending trendline that has been supporting the market since mid-2024.
Traders should closely monitor upcoming volume patterns, as increased volume during price declines would confirm the bearish outlook, while strong volume during rebounds might signal that buyers are returning to the market.
Additionally, market participants should pay attention to the $88,014 resistance level, as a clean break above it could shift the short-term momentum back in favor of bulls.
As it is, markets are turning their attention to improving trade developments, particularly between the US and China as reasons to pursue riskier holdings. At the same time, bitcoin has also historically shown demand during risk-off scenarios while traders look for an alternative store of value amid uncertainty in the FX and stock market. Still, keep an eye out for “digital gold” bitcoin behavior or correlation to tech sector shares, which has been observed in the past weeks.