Falling to $114,400 early on Friday, the Bitcoin price is now becoming oversold. Could the price continue to fall, or is the next big rally imminent?
The Bitcoin price has continued to track sideways and downwards since mid-July. A new local low earlier on Friday at $114,400 tagged the very bottom of the bull flag. The price is currently making its way back towards this point, and investors may be becoming nervous.
However, US trade deals are being settled, with US negotiating teams so far looking like they have come away with the better side of the bargain. A recent deal with South Korea included a $350 billion investment promise by Seoul into the US.
The good news on the US trade deals is having an effect on the US stock market, which made yet another all-time high on Thursday before falling back later in the day. If the stock market is going up, Bitcoin will be likely to follow.
All this said, the Bitcoin price is still under duress on Friday morning. Heavy sell pressure has led to $600 million in liquidations over the last 24 hours. $5.7 billion in notional value for options expires today. Investors must be wondering if the dip is for buying, or whether some more serious downside is on the way.
$BTC price hits bottom of bull flag
Source: TradingView
The short-term price chart for $BTC shows that the bull flag is now completely valid. The recent dip down to the region of $114,000 has put the third clear touchpoint onto the bottom of the bull flag. The struggle between the bulls and the bears has now reached its peak. If the bears can continue to force the price down and below the lower bull flag trendline and then confirm the breakdown, things could get very interesting, with a further dip down to $112,000 probably following.
Notwithstanding, this does look like what could be an excellent entry for traders looking to establish a long position on $BTC. Obviously, a stop loss below the lower trendline of the bull flag would provide protection if things did go pear-shaped.
The Stochastic RSI indicators are at the bottom, ready to turn back up, and the Relative Strength Index (RSI) on this time frame has its indicator just about to enter oversold territory.
Something to watch out for could be one last dip that shoots below the bottom of the bull flag, aimed by market manipulators to flush out the stops of those going long. If this happened, it could leave a candle wick to the downside behind it, but the candle body would be likely to close within the confines of the bull flag.
Bollinger Bands signal big move
Source: TradingView
As discussed in Thursday’s Bitcoin article, the Bollinger Bands had constricted to one of the most narrow points in quite some time. A big move in one direction or the other looked as though it was about to occur. On Friday, this appears to be happening as the jaws of the bands are now starting to open wider. With a downward impulse currently in play, it could be that the big move is to the downside. That said, there is still time for a ricochet back to the upside. Time will tell.
$109,000 is bull market platform for price structure
Source: TradingView
The weekly time frame is at a critical point. The Stochastic RSI indicators are angled downwards and could be about to begin their descent back to the bottom, draining price momentum as they fall. How the indicator lines close at the end of play on Sunday can be crucial for the price over the next weeks and months.
Looking at the price action in the main chart it can be seen that should the bull flag break down, the top of the previous bull flag at $112,000 could be the first pitstop. That said, the much stronger support at $109,000 would be the key level for the bulls to hold. This is the platform holding up the bull market price structure. If this were to fail, it could potentially signal the end of the bull market.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
