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The prices of other cryptocurrencies fell even more. All of this resulted in $1.5 billion in large liquidations.
Such a dramatic fall is associated with the collapse of the stock markets in China. At the same time, indeed, all other markets, including the US stock market, also showed a decline. It turns out that the cryptocurrency market correlates with the general global sentiment in the financial world.
Let’s take a look at the price of Bitcoin and see how these events affected its chart:
Over the past 2 weeks, we have repeatedly said that we expect the price of Bitcoin to fall to the range of $40,000 – $42,000. Yesterday, our assumptions were fully justified.
In just two days, the price of Bitcoin dropped from $48,000 to $40,000. The fall was almost 20%. Around the $40,200 level, buyers were actively involved and began to buy back the fall in Bitcoin. As a result, they quickly bounced back the price above $42,000.
The $40,000 – $42,000 price range is a strong support area. It was at this level that a large resistance level was previously located and from here the growth of Bitcoin began to $52,000. Therefore, a strong struggle between bulls and bears can unfold here.
We would like to draw your attention to the hammer candlestick pattern on the 4-hour timeframe. Typically, this formation is a pivot point on the chart. This time it is enhanced by a very long shadow from below, which speaks of the strength of buyers in this area.
In addition, we paid attention to the Stochastic and RSI indicators. Each of them has significantly dropped into the oversold zone and has already turned upward on the 4-hour timeframe. This means that there is high growth potential at the moment. MACD has also moved down significantly and has slight signs of a reversal.
We have stretched the Fibonacci grid to the full height of the fall from September 20th. The price has already come to the level of 0.236 and is fixing above it. We expect to see Bitcoin rise to $44,500 within a few days. After that, you need to re-analyze the chart in order to understand where the chart can move next.