Bitcoin recently experienced a significant rejection after attempting to breach the $107,000 ceiling, resulting in a pullback that appears to be testing key Fibonacci retracement levels. The cryptocurrency is currently trading around $103,076, which places it between the 50% ($104,312) and 61.8% ($103,648) Fibonacci retracement levels of the recent swing.
Price action over the past two weeks has formed what appears to be a consolidation pattern following the rejection from all-time highs. With multiple tests of resistance around the $104,975 area, sellers have maintained control of the upper boundary while buyers seem to be defending the $103,648 zone.
Critical Decision Point
The moving averages on the chart reveal important insights about bitcoin’s momentum. The blue 100 SMA is positioned above the red 200 SMA, which traditionally signals an overall bullish bias is still in play despite the recent correction.
However, the convergence of these moving averages suggests diminishing bullish momentum, which aligns with the recent price action.
Looking at the oscillators, the stochastic indicator has recently turned downward from the overbought territory, signaling that bearish pressure could be increasing in the short term. This bearish divergence between price and momentum indicators suggests the possibility of continued downside in the near term, potentially testing the 100% Fibonacci level at $101,501.
What’s particularly noteworthy is the larger technical pattern visible on the chart – a descending trendline from previous highs that has been serving as resistance for earlier tests. Price is now retesting this former resistance zone that could hold as support since it lines up with the lowest Fib.
Key Bitcoin Levels To Watch
Key levels to watch include the immediate support at the 61.8% Fibonacci level ($103,648). A daily close below this level could accelerate the downside move toward the 100% Fibonacci retracement at $101,501 and descending triangle bottom. This would represent a complete retracement of the recent upward move and could signal a more significant shift in market sentiment.
Conversely, if buyers manage to push the price back above the 50% retracement level ($104,312), we could see a retest of the 38.2% level at $104,975. A break and close above this resistance would invalidate the short-term bearish scenario and potentially set the stage for another attempt at the recent highs near $107,123.
The volume profile provides additional confirmation, showing diminishing participation during the recent consolidation, which is typical before a significant move. Traders should be cautious as this reduced liquidity environment can lead to sudden price swings in either direction.
For now, the overall trend remains bullish despite this correction. However, the multiple rejections near all-time highs coupled with the bearish divergence in momentum indicators suggest that a deeper retracement could occur before the next significant move higher. Crypto sector developments, including progress in the US stablecoin bill and state crypto reserves creation, could keep investor interest supported in the near-term.
