Bitcoin encountered an exhaustion point that has confounded analysts. Some analysts were expecting a 20–40 percent correction, but $7,800 resistance held. Is a retrace still on the horizon?

Following the $9,090 high of May 30, Bitcoin encountered an exhaustion point that lead Tuur Demeester , the founding partner of Adamant Capital, to believe that a 20 to 40 percent correction was likely.

Since the $7,800 level of resistance has been able to hold the price of BTC from a further drop, @SatoshiFlipper, a real estate developer, and cryptocurrency investor stated that the expected pullback did not materialize due to the maturity of the market.

Bitcoin technical analysis

A popular Twitter analyst under the pseudonym of @FilbFilb recently pointed out a correlation between Tether (USDT) and Bitcoin. According to the analyst, the correlation began around October 2018 before Bitcoin’s dive to $3,135 on Dec. 15 that same year. During that time, a massive amount of USDT was burned as BTC started declining.

In late April, a similar pattern occurred. Around $300 million USDT was minted while Bitcoin was climbing back to $6,000 and making new highs on a weekly basis.

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Twitter user @FilbFilb spotted a spike in minted Tethers that could be the catalyst for another upswing.

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Adding to the bullishness, another analyst on Twitter, @100TrillionUSD, shared a chart that depicts the recent Bitcoin price action and its growth in the 200-week moving average (MA), indicating that a bull rally is close.

The 200-week MA is one of the most relevant indicators for Bitcoin traders since it reveals the strength of the long-term trend. It acted as a support point in previous bear markets, containing the price from a further drop while serving as a reference point for new bull trends. Currently, the 200-week MA is growing at a 5 percent monthly rate, which is a bullish sign.

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On the 1-week chart, however, the TD Sequential Indicator gave a sell signal with a green nine last week. This technical index predicts a retrace that could last one to four weeks before the bullish trend continues.

Since Bitcoin has not been able to trade below the 7-week moving average, the bearish signal has not been validated, but if it does, a drop down to the 50 or 30-week moving average could be expected. Breaking above the previous high of $9,090 will invalidate the bearish setup and higher highs will come.

bitcoin technical analysisAccording to @FaithSK, a technical analyst, Bitcoin could actually be about to correct, which will decrease its market dominance as altcoins benefit from the drop. A fractal study between BTC’s all-time-high top and its market dominance adds credibility to the idea.

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In order for a correction to happen, Bitcoin will have to break below the support trendline, which has acted as a strong barrier since the beginning of April based on the 3-day chart. A move below it could take BTC to test the $6,200 support level.

At the moment, BTC is at a pivot point sitting below the $8,200 resistance and above the support trendline. A move above resistance with enough volume could take it to $10,000, while a move below support could be the beginning of a sharp decline in market valuation.

btc technical analysisDue to the importance of Bitcoin’s current trading level, there is a $600 no-trade zone between $7,600 and $8,200 on the 1-day chart. It would be wiser to wait for a break out of this trading range before entering a bearish or bullish trade.

Nonetheless, a head-and-shoulders pattern seems to have been developing since mid-May under the same time frame. The right shoulder is still forming, but breaking below the neckline sitting at $7,600 could trigger an 18.5 percent plunge. This bearish technical formation will be invalidated if BTC moves above the right shoulder at $8,200.

bitcoin pricePeter Brandt , a 40-years trading veteran, recently pointed out that its validity will only be known once it has been completed and confirmed.

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Brand’s tweet caused furor among analysts who thought his statement was contradictory since he had recently posted an Ethereum chart with a H&S pattern similar to Bitcoin.

A Twitter analyst under the pseudonym of @D4rkEnergYYY slammed Peter Brandt, suggesting that based on the book the Bible of Classical Charting the shape meets the criteria needed to be considered a head-and-shoulder pattern.

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If the bearish formation is confirmed and Bitcoin drops 18.5 percent to around $6,300 to $6,500, Gerard Walker, explains that this could be the right time to go long. The trader stated that $6,500 will be a confluent price point based on the Elliot wave principle, which at that price would initiate a new primary wave.

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On a short-term view, Jonny Moe, a day and swing trader, believes that a diamond pattern could be forming on the 2-hour chart. A diamond is a reversal formation that could break in any direction. Upon the break, an 8 percent increase or drop could be expected.

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Overall Sentiment

Bitcoin is at a pivotal moment that will determine the future of the market. Under the current conditions, this cryptocurrency can be considered “non-tradable” until it breaks above the $8,200 resistance or below the $7,600 support level.

Even if BTC breaks to the downside, it is worth noting, as @CryptoGainz stated, that entering a short trade could be extremely risky because the cryptocurrency market has been in a bull rally since the beginning of the year. Trading against the bigger trend could jeopardize an investor’s capital.

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Therefore, It will be wiser to wait and see if the retrace that BTC has experienced extends, giving opportunities for investors to re-enter the market. Or, if volume picks up, allow for the continuation of the bullish trend.

Until then, the best option is to wait on the sidelines while a clear trend is confirmed. As of right now, this could be considered a consolidation period as Murad Mahmudov, CIO at Adaptive Capital, explained:

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The post Bitcoin holds at $8,100 support—incoming retrace or continued consolidation? appeared first on CryptoSlate .