In the early hours of June 4 (UTC), Bitcoin (BTC) broke an uptrend it had been riding for all of May. The dip has so far been caught at a critical support/resistance (S/R) zone – which is to say, support has not yet flipped to resistance at this critical medium timeframe area. But it very well could.
As we can see above, it is important for Bitcoin to hold the area around $7,850 to $8,000; if it doesn’t, this dip could turn into a more extensive correction. The longer this dip lasts, the more likely it becomes to stay below the lost uptrend.
The next zones of support (grey bands) in this general area are $7,600, $7,300, and finally $7k. If these also do not hold, we will be in for a major – and ultimately healthy – retracement from Bitcoin’s highs.
Many were expecting Bitcoin to roll over as it has, because of last week’s candle close. A classic “doji” candle was painted on the chart, which often portends trend changes. In this case, the end of Bitcoin’s astonishing run from all the way back in February was clearly signalled by this candle (see below). Of course, dojis do not always work perfectly, as we see evidenced on the Bitcoin chart in early April.
If we are to expect a serious Bitcoin correction, we might strongly estimate it to land in the worst case in the zone surrounding $6,400. This area marks the critical S/R zone from all of the 2018 bear market, during which Bitcoin finally broke below after several months of retesting.
Given that Bitcoin has shattered this area beyond all expectations in the preceding months, there is a very high likelihood that this zone will hold and constitute a major buying opportunity.
As stated above, a retest and holding of this zone would also be extremely healthy for Bitcoin’s long term prospects: it would signify convincingly that the leading crypto has again entered a very long new uptrend – a bull market rather than just a bull run.