Bitcoin (BTCUSD) Technical Analysis: Don’t Miss This Correction!

Bitcoin is on a steady climb and has been able to make its way to the top of its ascending channel on the 4-hour time frame. Price could retreat from this ceiling, though, and make a retracement back to support.

Using the Fib tool on the latest swing low and high shows that this lines up with the 50% retracement level. It also coincides with an area of interest or former resistance that might now hold as support.

If so, bitcoin could resume the climb back to the swing high or the channel top near $7,200. A break below this area, however, could lead to a reversal from the climb.

RSI just hit overbought levels to show that buyers are feeling exhausted at this point and could let sellers take over. Similarly stochastic also made it to the overbought area and could be ready to turn lower soon. In that case, selling pressure could pick up and weigh on bitcoin from here.

Once both oscillators hit oversold levels and turn back up, buying could resume. However, the 100 SMA is still below the longer-term 200 SMA to signal that the path of least resistance is to the downside. Then again, the gap between the two is narrowing to signal slowing bearish momentum and a possible crossover.

Bitcoin is drawing support from revived speculations that the rebound is already underway. Many expect the SEC decision on pending bitcoin ETF applications to make or break the rallies, with approval likely driving price to record highs soon.

After all, this would represent a thumbs-up from the regulator and possibly welcome more crypto-based securities to be introduced later in the year. It would also make bitcoin more accessible to retail investors, thereby bringing more volume and increased activity.

The CFTC also recently reported that short bets on bitcoin futures have been on the decline, possibly signaling a shift in sentiment also.

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