Bitcoin’s Tumultuous Journey: A Tale of Drops and Potential Reversals 📉📈

by

Well, well, well! If ever there was a time to quote the immortal words of our dear friend Bertie Wooster, “What ho!” It seems that Bitcoin, that capricious creature of the crypto world, has decided to play a rather lively game of seesaw. Having reached the dizzy heights of $124,000, our digital darling has taken a tumble, shedding a rather hefty $9,000 since Thursday. However, fear not, for momentum indicators have had a jolly good reset, and the next upward impulse may very soon be upon us.

Long Liquidations Crush the Bulls

The crypto market, ever the scene of a grand spectacle, witnessed one of its customary bloodbaths over the weekend and into Monday. More than half a billion dollars of value was liquidated, a veritable feast for the bears. Indeed, more than five times as many long to short traders were liquidated, indicating that the bears were firmly in the driver’s seat. The new week has dawned with the bulls attempting to stem the tide. But the question remains: will we see another sharp plunge to the vicinity of $112,000, or is the next upward impulse about to kick in?

Is a Reversal Back to the Upside on the Way?

Not long after setting a new all-time high, the $BTC price took a nosedive, landing squarely atop the bull flag before slipping inside. The bears, no doubt, are patting themselves on the back, but the short-term chart suggests that a reversal to the upside might be in the offing. Currently, the price is resting on some horizontal support, while just above, the $115,800 level has transformed from support to resistance. So, which way will it go? The two indicators at the bottom of the chart are hinting that it might be back to the upside. The Stochastic RSI, for instance, has its indicators perilously close to the bottom, much like all the other short-term indicators. Even the daily chart is starting to approach the bottom. The Relative Strength Index (RSI), too, is teetering on the brink of the oversold level. A glance at the history of the RSI on the 4-hour time frame shows that the price usually bounces from such a position. Of course, there’s always the possibility of a further slip, but the signs suggest that $BTC is becoming oversold, making an upside move more likely.

A Correction to the 0.786 Fibonacci Level?

The daily chart for $BTC reveals that the price has touched the $115,000 support level. Just below lies the 0.786 Fibonacci level, the deepest of them all for this bull flag move. A return to this level is certainly within the realm of possibility. At the bottom of the chart, the RSI appears poised for a perfect retest of the descending trendline, which would likely result in a bounce back to the upside, a sentiment echoed by the price action above.

Inverse Head and Shoulders Pattern Still Valid

Zooming out to a broader view on the daily time frame, the inverse head and shoulders pattern remains a valid formation. A test of the neckline occurred when the $BTC price breached the bottom of its bull flag, and it’s possible that a retest might occur during the current retracement. Despite the deep dip, it still has a way to go to form a lower low and initiate a mini downtrend. If this were to happen, it could negate the inverse head and shoulders. However, as things stand, this is not the anticipated outcome, although the market does have a penchant for defying expectations.

$117,000 Becomes Make-or-Break Level

Finally, taking a macro view of the 2-week time frame, there are concerns for the bulls. Another 2-week candle body has closed beneath the $117,000 resistance level, and the longish candle wick to the upside is a testament to the bears’ strength at this critical juncture. The ascending trendline, marking the neckline of the inverse head and shoulders pattern, is compressing the price into an increasingly tight space, suggesting that an explosive move in one direction or the other is imminent. The Stochastic RSI indicators at the bottom of the chart are poised to cross back down to the downside, a scenario the bulls must avoid at all costs. The next two weeks will be crucial indeed.

Read More

2025-08-18 12:54