Bitcoin plunged Thursday, halting a price rally driven by fears of a depreciation of the US dollar and higher inflation.
The benchmark cryptocurrency fell to $ 16,200 per token ahead of the New York trading session, a multi-week low. In this way, Bitcoin has also fallen below critical parabolic support that had given it a concrete price floor during its relentless bull run for the past seven weeks.
Upon closer inspection, the bubble appeared to resemble a structure that the BTC / USD chart had formed between March and May earlier this year. The pair also rebounded to the upside while holding a bullish parabola for support.
It later corrected out of the pattern only to trade sideways for an extended period of time and eventually resume its uptrend.
Bitcoin has trended sideways between 23.6 and 0 percent Fibonacci since the outbreak of the parabola from March to May 2020. Source: BTCUSD on TradingView.com
Bitcoin trended sideways between the 23.6 percent and 0 percent Fibonacci levels after breaking out of the March-May 2020 parabola. Source: BTCUSD on TradingView.com
A similar structure emerged during the Bitcoin bull run in early 2019. The only difference, however, was that a deeper retracement on the downside ended instead of the sideways consolidation from March to May 2020.
The current Bitcoin parabola
The two fractals served their respective biases for the current parabolic case. When the BTC / USD exchange rate broke out of the bullish structure, it was in the 0 to 23.6 percent range on its Fibonacci retracement chart. Interestingly, the pair held the 23.6 percent level as support during the Thursday morning hours in London.
Bitcoin bullish parabola from September to November. Source: BTCUSD on TradingView.com
Bitcoin September-November bullish parabola. Source: BTCUSD on TradingView.com
But whether or will support maintain Bitcoin’s lingering bullish bias depends entirely on what appears to be a common wave of support across all of the recent parabolic corrections. That’s the green curve in the graph above: the exponential moving average of 20 periods.
The Bitcoin market held its short-term bullish bias as long as it was trading above the 20 EMA. In 2019, the price below the green curve, followed by another closing price below the red (50-SMA), moved the price to USD 3,200.
This was not the case after the collapse of the parabola from March to May. There the Bitcoin price was above the 20-EMA level, confirming its short-term bullish bias. In the meantime, even occasional failures below the green curve found extended levels of support for the red wave.
$ 20K likely?
Bitcoin attempting a retest of $ 20,000 is possible as long as support is maintained near the 20 EMA (near $ 15,000) and the 50 SMA (near $ 12,000). They would serve as ideal levels for traders to replenish their Bitcoin pockets and set another bullish parabola on the cryptocurrency’s all-time high.