Analysis: Bitcoin drops more than 5% in 24 hours, what’s next?

Bitcoin fell from around $64,500 to $60,500 today. This is a drop of 5% that puts the currency in a danger zone. If Bitcoin doesn’t recover here. the price could fall towards the low of $56,500. Let’s look at the graphs.

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Can BTC recover from here?

We’ll start this analysis with a look at the daily chart. Here each candle represents 24 hours, giving us a good idea of ​​the daily candle and the main support and resistance levels. The latter are shown as a red zone, blue lines and a red line.

The red zone has served as a key support point for Bitcoin for some time now. Almost every time the coin comes close to the bottom of this zone (62,000 dollars) it has recovered in no time. There was one instance where the coin fell further – this is indicated by the red line ($56,500) – but every other time the coin bounced back up, so there is hope that BTC will now bounce back.

If the currency holds strong here, it would be nice if Bitcoin rises above the red zone again. As you can see, there are few price points below where the coin can find support, so the drop will be sharp and fast if the price manages to break completely below this. The day is not over yet, so hopefully Bitcoin will be able to recover before these 24 hours are up.

Bitcoin’s decline

The decline in recent days can be explained by Bitcoin falling from a sideways movement (between the blue lines). This can be seen better if we zoom in. That is why we will also take a look at the 4-hour chart of Bitcoin. Here each candle represents 4 hours.

The blue lines originate from a previous low and high, and the coin initially refused to let the price move past either of these levels. As I mentioned in previous analyses, a break of these lines would cause BTC to move further in that direction.

When Bitcoin subsequently moved below the lower blue line, further downward movement was confirmed by making a negative test. This can be seen in the orange circle. Hopefully the decline has now ended, but of course we can never be sure. It is important to keep an eye on these price levels to be able to say more about the price.

Should Bitcoin close below the red zone, the chance of a decline towards $56,500 increases, but if the currency recovers from here, it could still be positive in the long term. This still creates a higher low on the daily chart.

This clearly does not apply to the 4-hour chart, where the downward trend has been in effect since the breaking of the lower blue line. A combination of two downward trends is of course bad, but the long-term trend is still leading, and there is still some room for recovery. Therefore, keep a close eye on these levels.

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