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Yesterday, Bitcoin and other cryptocurrency markets experienced a sudden decline, with Bitcoin dropping more than 5% to $28,500 due to continued sell-offs throughout the day. This came after Bitcoin had fluctuated around the pivot level of $29,800 since the beginning of the week.
The cryptocurrency fell below this pivot level after sales from the $30,300 band, leading to a negative zone in the second half of the week. BTC closed at $28,800 after yesterday's selling spree but managed to stay above the first support price of $28,750, which coincides with the short-term uptrend that started after the consolidation period.
Today, $28,750 is an important support point, and a drop below this level may trigger a decline to the second support at $28,000. With the Stochastic RSI falling to the oversold zone in the daily outlook, Bitcoin buyers need to keep the cryptocurrency above $28,750 to see a possible recovery toward the first resistance level at $30,900 while limiting the downward momentum.
To confirm such a rebound, the first condition would be to see hourly closes above the 8-day EMA (29,500). According to the short-term price action, the BTC price has been using the 8-EMA as a dynamic support for a long time, with rallies taking place above this average. Therefore, it would be wrong to talk about BTC entering a bullish momentum until it starts trading above its 8-day average again. The second bullish signal is the reversal of the Stochastic RSI.
Looking at the daily chart of Bitcoin from another angle, the price of BTC encountered resistance at an average of $28,750 for almost a month. It then broke through this resistance and entered the $30,000 area, encountering resistance at $30,500 on its way to $34,000, which we see as the next target area. Given the retreat over the past 24 hours, we can only talk about a retest of $28,750.
If Bitcoin buyers can successfully pass this test and defend the $28,750 support level, the upward momentum can increase, and the crypto could move toward $34,000. Failing that, we could see Bitcoin fall back to consolidate around $27,000.
The retreat in the crypto markets was felt more strongly in the altcoin market. Ethereum quickly gave up last week's gains with a daily drop of 8%.
Ether slowed its decline at the first support price, as it fell to the $1,920 band. With daily closes above $1,920, ETH may rise toward the $2,000 - $2,035 range, similar to Bitcoin.
On the other hand, Ethereum is considered to be bearish as long as it remains below $2,000; hourly closes below $1,920 may trigger the downward movement toward the second support zone of $1,840 and then the main support level in the $1,700 band.
Disclosure: The author doesn't own any of the securities mentioned.
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