The crypto market is experiencing a downward correction after a prolonged upward movement. Many altcoins have already declined. Bitcoin managed to hold at the $42k level. This is positive news for crypto investors. At the same time, there is a possibility of further correction of BTC. Notably, the continuation of the downward movement is necessary for the crypto and the altcoin markets.
As of 17:00 on February 9, bitcoin reached the support level of $42.7k. Trading volumes remain high but there are more short positions now. BTC managed to consolidate above $42k. entering the sideways channel. Bitcoin has been rising for a week. As a result, the market became overheated.
Given the strong bullish bias, there are two possible scenarios. The BTC price may continue trading flat. Then it will consolidate above $46k. Shortly after, it is likely to rebound and hold at around $39k-$40k.
The second scenario implies a decline to the resistance level without an attempt for a reversal. The price will escape the narrow range and resume the downward movement. BTC will return to the same range where traders with speculators are likely to make a profit.
The final outcome in both scenarios will be a return to the $40k-$50k range and further recovery after a correction. I have already said that this reduction is necessary to complete the formation of the figure of technical analysis inverted "head and shoulders". I have already said that a correction is necessary for the instrument to complete the formation of the "head and shoulders" pattern. According to this scenario, there will be an upward movement to $56k with temporary corrections. The main condition is consolidation at $41k or the formation of the pattern will not take place.
There is also an upward pattern "cup with a handle" on the 4H chart. It indicates a rise to $56k-$58k. Therefore, in the worst-case scenario, bitcoin will slide into a new round of correction, resuming an upward movement to $56k-$58k.
Consolidation of BTC at $42k-$43k will have a positive effect on the entire market. If it manages to enter the sideways channel, it will fuel the recovery of the altcoin market. The scenario may come true only if BTC holds at the support zone. Otherwise, the altcoin market will also enter the correctional phase. The cooling of the market is likely to begin.