Bitcoin could soon define the direction of its trend as the $46,200 support level needs to hold for prices to rebound or break for a steep correction.
Bitcoin at the Crossroads
Bitcoin has posted significant gains over the past month, surging by more than 64%. The flagship cryptocurrency went from trading at a low of $29,300 on Jul. 20 and to hit a high of $48,150 on Aug. 14.
The upward price action seems to be contained within an ascending parallel channel. Each time BTC has risen to the channel’s upper or middle boundary since Jul. 20, a rejection occurs that pushes prices to the lower edge. From this point, Bitcoin tends to rebound, which is consistent with the characteristic of a channel.
Now, the pioneer cryptocurrency sits at a make-or-break point. A recent spike in profit-taking pushed BTC’s market value down by nearly 5% toward the channel’s support trend line.
If the market behavior seen over the past month repeats, the channel’s lower boundary could hold and serve as a rebound point toward the middle or upper trend line.
These critical resistance levels sit at $51,000 and $57,000, respectively.
Nonetheless, further selling around the current price levels might be significant enough for Bitcoin to break through the underlying support. A breach of the channel’s lower trend line at $46,200 projects a downward target equal to the width of this technical formation.
Under such unique circumstances, Bitcoin would likely retrace by more than 16%, targeting the psychological $40,000 support level.
via Crypto Briefing