The Bitcoin price has extended its correction down to a reduction of 4% ($2,600). Currently sitting on the bull market trendline and possibly facing this firm support being turned into resistance, is this the time to throw in the towel and look for much lower prices?

$BTC price confirming below bull market trendline?

Source: TradingView

As can be seen in this 4-hour chart above, the $BTC price is at a most crucial moment. Not only has the price fallen through the bear market trendline, but is also in the process of possibly confirming below the bull market trendline. Should this happen, a continuation of the dip down to support at $62,250 could be next.

So what are the chances of this further breakdown happening? If the confirmation takes place, it would be a very good chance indeed. Also, if the price goes below the last local low at $62,250, this would be a lower low, continuing the downward trend.

There is reasonably decent support at $62,700, which might hold up the price. If the price bounces before too much damage is done, this might simply be a fakeout as happened around the beginning of August, as can be seen if one looks left in the chart. If we add to this that the $BTC price is entering oversold territory, this also perhaps lends credence to a fakeout.

Rest of the day needs to pan out

Source: TradingView

When stepping up into the higher time frame there is a slight difference in perspective. From the worry of the short term time frame we have changed to less of a concern in the daily time frame. It also makes a big difference that it is still relatively early in the day. The current candle does not close for another 12 hours or so and so this could certainly just become yet another candle tail below the bull market trendline, and also, just as easily, below the bear market trendline.

However, while the Stochastic RSI indicators are about to bottom and would be ready to turn back up very soon, the RSI indicator is telling a different story. Here the indicator line is heading downward, probably signalling this drop in the price action. That said, once again, the rest of the day needs to pan out. In short, this daily candle needs to close back above the bull market trendline, and it would be even better if it closed above the bear market trendline as well.

WARNING! Weekly confirmation below the bear market trendline?

Source: TradingView

Moving into the macro time frame of the weekly, at first glance things generally look ok. The weekly candle is sitting astride the bull market trendline, and there is strong support just below this at $62,250. 

However, looking at the last 4 candles we can see that each red one has enveloped the previous green one. This is a bearish development and would usually lead to more downside price action. The same thing can be seen in the chart where the green candle in June enveloped the previous red one, leading to an upside rally, while at the top of the chart and at the top of the big bear flag, a red candle enveloped the last green one, leading to a huge price correction.

WARNING! If the current weekly candle doesn’t get back above $63K, the new weekly candle will open below the bull market trendline. This could spell disaster, with the $BTC price potentially crashing down into a new bear market low. Watch the rest of this week’s price action like a hawk.

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.