Bitcoin appears to be testing a significant support level after declining from recent highs, with current price action suggesting a potential reversal in the near term.
The cryptocurrency is trading at $94,282 following a bounce from the lower boundary of its ascending channel, which has been in place since last week.
The most prominent feature on the chart is the ascending channel that has guided Bitcoin’s movement since mid-2023. After reaching highs near $109,800 in December 2024, BTC/USD formed a double top pattern before breaking below the neckline around $93,500, confirming a shift in the short-term trend.
Bitcoin Channel Dynamics
The recent selloff pushed Bitcoin down to the $77,100 level, which provided strong support and sparked the current recovery. Price has now rebounded significantly and is testing the mid-channel area around $94,000-$96,000, which coincides with the 50% Fibonacci retracement level of the recent decline.
This zone represents a critical decision point for Bitcoin, as continued strength above this level could signal a resumption of the longer-term uptrend, while rejection here might confirm the bearish outlook suggested by candlesticks closing below support.
The 100 SMA is currently above the 200 SMA, indicating that the path of least resistance remains to the upside despite recent weakness. However, the gap between these moving averages has narrowed considerably, suggesting that a bearish crossover may be imminent if selling pressure persists.
Bitcoin Oscillators And Entry Zones
The stochastic oscillator has moved upward from oversold territory and is now approaching overbought conditions, suggesting that bullish momentum could be waning. A turn lower from current levels would signal renewed selling pressure and potentially confirm resistance at the 50% Fibonacci retracement level.
The MACD indicator (shown in the lower panel of the chart) appears to be flattening after a period of decline, potentially signaling a slowdown in bearish momentum. However, it has not yet shown a convincing bullish crossover, suggesting that the recovery may still be fragile.
The formation of long red candlesticks at any support levels would be a strong indication of a return to bearish momentum. Conversely, strong green candles closing above the channel could suggest that the longer-term uptrend is reasserting itself.
From a fundamental perspective, market participants continue to watch developments under the Trump administration, which has expressed support for cryptocurrencies but has yet to provide concrete policy details. The lack of specific announcements from the Digital Asset Summit in New York a few months back contributed to the recent correction, though the longer-term bullish narrative remains intact.
For now, Bitcoin appears to be at a crossroads, with the key $93,500-$97,300 zone likely to determine whether the cryptocurrency resumes its longer-term uptrend or experiences a deeper correction. Traders should watch for strong rejection or acceptance at these levels for clues about Bitcoin’s next major move.
