The price of Bitcoin (BTC) fell to $ 15,670 on Binance on November 15. The highly volatile dip came hours after BTC hit $ 16,355, demonstrating solid momentum.
Three key factors are likely to have caused this overnight Bitcoin price drop. The three potential factors are a weekend jolt, retesting the daily moving average (MA) and retesting the parabola.
Weekend shakes and retesting a bottom support are healthy things
How Cointelegraph reported, Algorithmic traders were expecting to see a weekend drop in the Bitcoin market.
There were a bunch of sell orders above $ 16,500 that didn’t go away when the price approached $ 16,400. This meant that these orders were true sell orders, applying selling pressure in the cryptocurrency market.
In addition to the market structure that likely encouraged traders and bots to sell short, chain analyst Willy Woo said weekend volatility is somewhat bullish.
Said expect a jolt from the “technical bearish” But the market is still in “buy the dip” territory. Wrote:
“Weekend trade setup: get rid of some bearish technicals (4hr RSI, 8hr TD9). The fundamentals of the chain in the short and medium term are bullish, more coins leave the exchanges, more users arrive. Buy the scene of the fall.
Buys during a dip reflect bullish momentum
On the daily chart, the drop to $ 15,600 confirmed a retest of the 10-day moving average. The retest was important because last week, after a big price hike, BTC retested the same moving average before moving higher.
If the price of Bitcoin continued to fall below the 10-day moving average, it would have meant a deeper drop. But, the immediate recovery from the same level it recovered from in the November 7 crash is a relatively positive short-term thing.
On November 7, BTC experienced a similar drop, although in a different price range. The price plummeted abruptly from $ 15,753 to $ 14,344 to record a 5% drop. The market leading cryptocurrency also bounced off the 10-day moving average on the daily chart on that occasion.
In the next few days after, BTC hit a two-year high of $ 16,480, which confirmed a strong break.
Parabolic rises need new evidence
Josh Olszewicz, cryptocurrency charter and technical analyst, shared a graphic where you can see that Bitcoin is in a parable.
During a parabolic ascent, The momentum of an asset continues to build as the price rises. But, if the parabolic cycle breaks, then the asset may be at risk of a big pullback.
The Bitcoin parable will remain intact as long as BTC manages to stay above the $ 15,300 to $ 15,500 range.
Traders and technical analysts have reported similar levels in the last 24 hours. Michael van de Poppe, a full-time trader on the Amsterdam Stock Exchange, said Similarly, the support level at $ 15,500 remains key for BTC in the short term.
Short term, Bitcoin would need to see continued resistance above $ 15,500 and successfully defend the $ 15,700 support as it has for the past 24 hours.