FX.co ★ Bitcoin starts a downward movement. Local correction or trend reversal?

The growth rate of bitcoin quotes has significantly decreased recently. The main reason for this was the unsuccessful assault on the $46,100 mark, after which, bitcoin began to fluctuate and gradually shift the range of fluctuations towards the lower limit of the support area. When analyzing the current situation, it is worth considering several options for the development of events. Within the framework of an upward trend, the rollback of bitcoin looks like a natural correction before the subsequent growth. However, if the price correction deepens beyond the $40,000 mark, we can already consider an option with a wide trend reversal.

As of 11:00 UTC, bitcoin is approaching the test of the support zone at $40,000. Over the past day, the asset has lost 2% of its value, and daily trading volumes remain on average in the region of $37 billion. This suggests that sellers have strengthened well in the area of $46,000 and buyers do not have enough resources to break through the resistance. This is also indicated by the local (two-hour) dynamics of the price change -0.5%. Sellers have been holding the $46,000 mark for three days, and its unsuccessful breakdown provoked a local correction with claims for something more. Given the current dynamics of price movement and on-chain activity, the main task of bitcoin will be to consolidate above $45,000. The cryptocurrency failed to defend two important support zones at $45,700 and $45,400. Sellers have successfully worked out a local bearish wedge and continue the downward movement. However, any movement should not be perceived as a signal to sell or a large-scale turn of the market situation. For global growth (above $50,000), a market correction is necessary. The probability of its development was most expected when testing the area of $48,000-$50,000 or in the range of $44,000-$42,000. Given that buyers were not ready for the pressure at $46,000, we will most likely see a drop to $42,000.

However, as of August 12, it is impossible to exclude the option with an aggravation of the market correction and a breakdown of the $40,000 round mark. The current on-chain indicators of the cryptocurrency clearly demonstrate the inability of buyers to overcome $46,000. Analyzing the Daily Active Addresses, it becomes clear that the activity in the BTC network is approaching the minimum indicators since July 18, when the rebound and bullish breakout of the cryptocurrency began. A sharp downward trend is also visible on the Active Addresses 24h indicator. The number of unique addresses is inexorably falling and is approaching a three-week low. All this indicates a local change of priorities during trading. If the cryptocurrency fails to consolidate above the EMA-72/89 and breaks through the support zone at $44,700, the probability of a large-scale opening of shorts will sharply increase. This will significantly increase the pressure on the price, and the correction of bitcoin may worsen, up to the breakdown of $40,000 and further downward movement.

On the H1 chart, bitcoin confidently maintains bearish signals and strives to break through the final support zone of this area. The RSI has fallen over 40, and the MACD is moving to zero. Stochastic was close to forming a bullish intersection, but the market did not support the momentum, and the indicator continued its downward movement.

On the 4-hour chart, the situation is no longer so unambiguous. Stochastic is close to forming a bullish intersection and is preparing to start moving up, and the RSI is straightening out and has every chance to rise to 60. At the same time, the MACD indicator continues to give bearish signals.

On the daily timeframe, the stochastic completes a bullish breakout and begins a downward movement. At the same time, the RSI returns to the 60 zone, and the MACD still shows the probability of continuing the bullish movement. With this in mind, we can say that the situation with BTC closer to the first option and the market correction will lower the asset's indicators to the range of $44,000-$42,000. However, the situation with bitcoin's social activity forces us not to rule out a breakdown of this range to go deeper below $40,000. And in this case, a trend reversal can be allowed.