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TA: Correction almost over for Bitcoin?

TA: Correction almost over for Bitcoin?

December 11, 2021

The crypto markets crashed last Friday and bitcoin even briefly fell below $45,000. Is the worst over now?

Written by Steven Anthonis - @stevenanthonis

Bitcoin touched $68,000 in early November but then started a strong correction. Let's take a look at the technical picture to see how much damage has been done.

We can see that bitcoin is moving in a broad rising trend channel. At the top, we see a return line that was touched by the October and November peaks. At the bottom, we see the trendline that connects the August and September bottoms. And right now the price is near this trendline.

BTCUSD_2021-12-11_10-51-29.jpg

Chart: Tradingview

Bear market

Looking at the indicators, we see both the RSI and MACD in bear market territory. With the RSI, according to this theory, the bear market starts at a drop below 45 (red arrows). The MACD is also in bear market territory because the indicator has fallen below the zero line.

This exact situation also occurred in September, but that was a short-lived moment of weakness. In the green circle on the price chart we saw that the 8 EMA went below the 75 EMA, but the 21 EMA was able to hold up above the 75 EMA. We are seeing something different now. Both the 8 and 21 EMA have fallen below the 75 EMA as you can see in the red circle. So this means that there's more technical damage.

Is the worst already over?

The price chart looks weak, but we may be able to bounce back around the rising trendline. In that case, the worst is over. Given the damage on the chart, we don't expect a sharp rise right away. Rather, we can expect some some choppy trading in the current zone and possibly an extensive test and retest of the rising trendline. So it will probably take some time to say goodbye to this correction. The technical picture will start to strengthen again at a close above the moving averages or roughly $55,000. This would be the positive scenario.

If we don't bounce around the trendline, the negative scenario takes the lead. We would see that unfold with a close below the rising trendline and $44,850. In that case, we could quickly slide down to $40,750, $35,000, and $30,000.

Conclusion

There is some technical damage on the chart, but we may be able to bounce back around the current zone. Above $55,000, the technical picture gets stronger again. However, if the weakness persists and we close below USD 45,000, it could move lower again soon.

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