Bitcoin (BTC) Final Pullback Before a Major Rally? Price Analysis

After making its all-time high on Monday the Bitcoin price has lost trend and is making its way lower. Could this be the last chance to buy before a potential major rally that takes Bitcoin into new price territory?

A further fall for the Bitcoin price?

Source: TradingView

The 4-hour chart for the $BTC price shows how the price dipped below the short-term local uptrend and is now possibly making its way lower. The 0.236 Fibonacci, which is the most shallow of the Fibonacci retracements, has held the price up to now. However, there are signs that the price could start to make its way down to one of the lower Fibonacci levels.

Chief among these signs is bearish divergence. This is on the short-term time frame so it is not as reliable as for higher time frames, but it can be clearly seen that the price action was rising while the Stochastic RSI indicators and the RSI indicator were falling. This is likely to pull the price down lower if it plays out.

The question then is to which Fibonacci level could the price fall? For the price to stay at the 0.236 Fibonacci is probably not enough of a pullback, so the 0.382 Fibonacci would be a bear target at the very least. The 0.5 Fibonacci looks more likely as it has stronger support, although the 0.618 Fibonacci is the golden level and would be the healthiest retracement of them all.

Could the price get all the way back down to these levels given the very positive market sentiment for Bitcoin currently? Yes, it’s entirely possible, and it would also help the daily Stochastic RSI indicators to reset, which could eventually signal the strong upside price momentum that could take Bitcoin to a new high.

Bitcoin bullish pattern continues to develop

Source: TradingView

The daily chart for the $BTC price illustrates that an inverse head and shoulders pattern is still taking shape. It just remains for the price to come down further in order to form the right shoulder. If this takes place, the price would then have to return to the multi-year ascending trendline, break through and confirm above, for the pattern to be validated and the measured move to $145,000 to start developing.

The support level on the chart equates to the 0.5 Fibonacci in the previous chart. It can be seen that this is a good level of support which may attract the price to it. 

The indicator lines in the Stochastic RSI need to keep dropping, while the indicator line in the RSI looks as though it might come down to test the descending trendline. A great setup for an eventual bounce and rally is developing nicely.

Bitcoin price tapping on 8-year trendline

Source: TradingView

The weekly chart for the $BTC price reveals the possibility of an epic breakout of an 8-year trendline that up till now has not even had a candle wick pass beyond it. Higher highs and higher lows mean that the price is starting to beat against the trendline. The more taps on a pane of glass, the more likely it is to eventually break, and this is the likely scenario here.

Below, the Stochastic RSI indicators are angled up perfectly, signalling very strong upside price momentum, while the MACD at the bottom of the chart has the blue indicator line posturing to cross above the red signal line. At the same time, the red and pink bars in the histogram look as though they are about to give way to bullish green bars.

Last chance to buy?

The scene is set. Is this the last chance for investors to buy Bitcoin before a massive rally that will potentially take the king of the cryptocurrencies to $200,000 and possibly beyond? The technical setup says yes, while the macro economic picture of an accelerating weakening of the dollar could also give the thumbs up.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.