Market sentiment has fallen again as Bitcoin (BTC) tumbled out of an ascending channel. Having dipped back under $86,000 early on Monday, many will be wondering if this is the start of the next leg down. Is it? A corrective impulse was overdue Source: TradingView Looking first at the 4-hour time frame, it can be seen that the $BTC price was not able to get above the $91,450 horizontal resistance, having traversed just underneath it since Thursday. One attempt to open a 4-hour candle above was dashed by the following candle falling back through. The ascending channel (in blue) was holding nicely, but the price was also battling a descending trendline. Once the bottom of the channel forced the price against this trendline and the horizontal resistance, the result was the sharp drop out of the channel. The bulls had also been running out of steam for quite a while, as the short-term momentum indicators had spent an extended period of time at their tops. A corrective impulse was overdue, and now it has happened. In fact, not only did the price come down perfectly to support at the major ascending trendline, but it also fell to the full extent of the measured move out of the ascending channel. Therefore, if one ignores the anguished cries of doom across social media, this is probably just a necessary short-term pullback. Of course, if the price falls through the major trendline, sitting up and taking notice is recommended. Although even then, the price could come all the way back to the $80,000 region, form a double bottom, reset all the momentum indicators, and rally back to the upside in earnest. As things stand, there is no reason for concern yet. A tale of two trendlines Source: TradingView In the daily time frame it is becoming a tale of two trendlines, at least in the short term. The lower ascending trendline stretches back to October 2023, while the upper descending trendline has its beginning in July this year. One of these trendlines needs to win out. A two-year trendline vs a 4-month one would tend to favour the longer trendline - other factors and indicators allowing. At the bottom of the chart, it can be observed that the RSI indicator broke through the down trend. Could it be that it has now come back to confirm this breakout? Next big dip, or rally back to the top? Source: TradingView The change in the weekly chart is that the scary-looking correction from the all-time high has halted. Could it be that the $BTC price is going through a similar setup to the pause, then big dip, that took place in October? It’s certainly a possibility, although this time the Stochastic RSI indicators have fully hit the bottom, and now they are crossing back up again. Nothing is guaranteed in price charts, but as things stand, it is generally acknowledged that a top isn’t in, therefore it would be imagined that the scarcest financial asset in the world could make its way back to the huge upper trendline at least. We are about to find out if this will be the case. 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.
