will there be a price correction in the following 3 days for bitcoin? do the technical analysis and check
Bitcoin's Looming Correction: Technical Analysis Points to Short-Term Dip
The cryptocurrency market is bracing for a potential Bitcoin price correction in the coming days, as multiple technical indicators and expert analyses suggest a downward trend is imminent. Despite Bitcoin's recent rally to nearly $70,000, the digital asset's price action and market sentiment indicate that a short-term pullback is likely within the next three days.
Key Technical Indicators
Bearish Engulfing Pattern
Bitcoin's weekly chart is currently forming a bearish engulfing pattern, a strong indicator of a potential price decline following a short-term rally (Bitcoin Magazine Pro). This pattern typically signals a shift in market sentiment from bullish to bearish, suggesting that sellers are gaining control over the market.
Relative Strength Index (RSI)
The 14-day RSI for Bitcoin currently stands at 54.58, placing it in neutral territory (CoinCodex). While this doesn't directly indicate an imminent correction, it suggests that the market lacks strong bullish momentum, leaving room for a potential downturn.
Moving Average Convergence Divergence (MACD)
The MACD indicator, which helps identify potential trend reversals, is showing signs of divergence. This divergence between the MACD line and Bitcoin's price action often precedes a correction, further supporting the likelihood of a short-term price dip (Bitcoin Magazine Pro).
Support Levels and Price Targets
As Bitcoin's price hovers around $61,000, several key support levels come into focus:
- The "golden zone" between $60,500 and $57,400, coinciding with the 0.50-0.618 Fibonacci retracement levels.
- The lower support at $54,000, where an unfilled CME gap exists.
- A critical level at $52,510, which, if breached, could invalidate the current bullish structure.
Analysts predict that Bitcoin may test these support levels in the coming days, with a potential drop to the $57,000-$54,000 range being a likely scenario (Bitcoin Magazine Pro).
Market Sentiment and Liquidation Risks
The current market sentiment appears cautious, with the Fear & Greed Index showing a neutral reading of 50 (CoinCodex). This neutral stance suggests that investors are uncertain about Bitcoin's short-term direction, potentially setting the stage for increased volatility.
Adding to the bearish outlook is the significant amount of leveraged long positions in the market. An estimated $612 million in liquidations is poised at around $54,370, creating a potential cascade effect if Bitcoin's price drops below this level (Bitcoin Magazine Pro).
Historical Context and Seasonal Trends
October has historically been a bullish month for Bitcoin, often referred to as "Uptober" by cryptocurrency enthusiasts. However, the current price action contradicts this trend, with Bitcoin down 5.7% since the start of October (Bitcoin Magazine Pro). This deviation from historical patterns adds weight to the argument for a short-term correction.
Expert Predictions and Market Forecasts
While long-term forecasts remain bullish, short-term predictions align with the technical analysis suggesting a correction. CoinCodex's algorithm predicts a 17.37% increase to $73,956 by October 12, 2024, but this forecast may not account for the immediate short-term risks identified by technical indicators (CoinCodex).
Independent analyst Dentoshi notes that losing the 4-hour EMA-200 would confirm further chop for BTC and highlight a potential sweep of the lower support levels (Bitcoin Magazine Pro).
Macroeconomic Factors
The cryptocurrency market doesn't exist in a vacuum, and macroeconomic factors play a crucial role in Bitcoin's price movements. Recent geopolitical tensions in the Middle East and concerns about the global economic landscape have shifted investor sentiment, prompting many to seek refuge in traditional safe-haven assets like gold (Bitcoin Magazine Pro).
Additionally, comments from Federal Reserve Chair Jerome Powell suggesting the possibility of further interest rate cuts have intensified concerns about the macroeconomic outlook, potentially contributing to Bitcoin's short-term volatility.
Conclusion
Based on the convergence of technical indicators, market sentiment, and historical patterns, a Bitcoin price correction within the next three days appears highly likely. The formation of a bearish engulfing pattern on the weekly chart, coupled with neutral RSI readings and MACD divergence, strongly suggests that Bitcoin may test lower support levels in the $57,000-$54,000 range.
Investors and traders should be prepared for increased volatility and potential downside risks in the short term. However, it's important to note that short-term corrections are often healthy for long-term bull markets, allowing for consolidation and the building of stronger support levels.
As always in the cryptocurrency market, vigilance and risk management are crucial. While technical analysis provides valuable insights, unexpected news or market events can quickly alter the landscape. Traders should closely monitor key support levels and be prepared to adjust their strategies accordingly in this dynamic and often unpredictable market.