US investment company Bitcoin’s 30% price drop last month brought a rapid bear market for the cryptocurrency, but prices are starting to stabilize, according to Katie Stockton, technical analyst at Fairlead Strategies.
Stockton said in a note on Monday that the short-term momentum for Bitcoin has been neutralized after a few weeks of decline. A good sign for crypto bulls is that bitcoin is consolidating above the initial support level of $44,200, which represents a 61.8% Fibonacci retracement level.
“An advanced diary [MACD] and short-term oversold conditions suggest that Bitcoin may stabilize around initial support in the coming days.”
But, according to Stockton, the intermediate momentum is bearish, meaning that the potential for further downsides in Bitcoin prices remains.
“Weekly stochastics have not yet entered the oversold territory, indicating that the correction will continue. If the initial support (44,200) is broken, the key long-term support at the lower end of the weekly cloud will likely be tested around $37,000.”
A drop to $37,000 would mean a potential drop of 24% from current levels. Still, the long-term momentum remains bullish, so any drop could be temporary unless the monthly MACD gives a sell signal, according to the note.
“There has been a dip in long-term momentum that has caused us to watch the monthly MACD closely, but we maintain a long-term uptrend with the rising weekly cloud still intact.”
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.