Bitcoin (BTC) finally recovered from its sharp drop last week and is currently hovering around $7,300, a move of more than ten percent since the latest low of $6,430.
Crypto market daily performance. Source: Coin360
However, the price of Bitcoin did touch $7,700 and made a sharp drop yesterday to close a CME futures gap at around $7,230.
So is it time to be bearish, bullish, or neutral? A new check of the graphs is warranted after the latest dropdown.
Bitcoin potentially forming a bottom
BTC USD 2-day chart. Source: TradingView
The overview shows that Bitcoin is still trending down from the year’s high at $13,900. In addition, a wick inside the green zone and golden pocket Fibonacci ratio (0.618-0.65 area) provided intense buying pressure. This lead to the bounce from last week from $6,430 to $7,690.
The green area can be seen as a substantial area of support, as the price has been bouncing off the $6,000 area numerous times during 2018. Aside from that, the price was stuck inside a narrow range before the huge dropdown to $3,100 occurred.
Constructing a bottom formation inside this green area could make this vital support/resistance area as a launchpad for a new upwards move.
Moreover, some bullish divergences are appearing as well, which typically provides fuel for a probable trend reversal.
Total market capitalization chart. Source: TradingView
The total market capitalization chart is providing a similar view to the Bitcoin chart: a full retrace towards April / May levels and finding support in this zone. The chart shows a possible bullish divergence as well, leading to a potential trend reversal.
The total market capitalization chart often provides a more unobstructed view of trends and potential support/resistance levels.
Total market capitalization chart. Source: TradingView.
Data shows that it lost a crucial support level in August 2018, while Bitcoin was still hovering around $6,000 as crucial support. Thus, it is likely that this chart is, once…