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Pattern Reveals Continuation of Bloodbath as BTC Loses Major Support
Analyst Josh from Crypto World took a look at his latest analysis and stated that Bitcoin is currently facing rejection from a critical resistance area, prompting another test of a key support level. This pattern has also been observed in Ethereum, which is rejecting a major Fibonacci level.
Recent price movements: On the Bitcoin 4-day chart, the Super Trend indicator provides details on recent price movements. Despite The price of Bitcoin falling below $56,000, the 4-day candle closed above this level. This close has, for now, avoided a bearish reversal signal on this time frame.
The critical level to watch remains just below $56,000. If the next 4-day candle closes below this level, it would confirm a bearish reversal, flipping the indicator from green to red. Historically, such reversals have marked the start of prolonged bearish trends.
Bitcoin Daily Chart and Bullish Divergence
Current Price Action: In the newspaper Bitcoin chart, after a short-term bounce, the price is now retesting the support between $56,500 and $57,500. A confirmed bullish divergence on the daily timeframe suggests a sideways consolidation or slight bullish relief in the near term.
Critical Support Levels: However, a confirmed daily close of the candle below $56,500 would invalidate this bullish divergence and signal further bearish action. It is crucial for Bitcoin to maintain support above this level to avoid a prolonged decline. Earlier today, the price fell below $55,500. If the price loses the $56k support levels again, the analyst’s prediction of a bearish trend could come true.
Liquidation heat map: The analyst also noted that over the past day, Bitcoin has cleared a lot of liquidity on the upside. He mentioned that there was liquidity starting from just above $57,000 to around $57,500, which has mostly been cleared. There is still a significant area of liquidity between $58,800 and $58,900, just below $59,000. He suggested that Bitcoin could soon reach near $59,000 to clear this remaining liquidity.
Read also: Cryptocurrency Market Analysis: Bitcoin, Ethereum, Altcoins on the Rise!