Bitcoin Futures (BTC1) – Facing notable downside risks following a 17% decline in AprilPosted on Monday, May 2 2022 at 9:05 pm GMT+0000
April used to be a positive month for the crypto-king, but this hasn’t been the case this year. Bitcoin Futures (BTC1) plunged more than 17% this April marking the biggest monthly drop since last December. May started with a slightly positive tone, leading to the liquidation of $46.48 million in positions, among which almost 58% were on the negative side of the market.
Following the formation of an evening star pattern around the end of March, the price fell below the Ichimoku cloud spreading worries among traders about the persistence of the long-term positive structure. The Ichimoku lines are still negatively aligned, and the Awesome Oscillator is fading below zero, conveying a picture where the negative impetus is gaining strength. Nevertheless, the fact that the Ichimoku lines were following a horizontal path over the last few sessions, and the %K line of the Stochastic oscillator is trying to reverse higher in the oversold waters, is giving some hope that the bears may be running out of fuel.
However, if those stubbornly retain the lead, they will push towards the January low of 33,000 which marks the last defensive line for the long-term positive outlook. Cracking that floor, they will battle with the 61.8% Fibonacci retracement level of the uptrend stretching from the March 2020 bottom to the November 2021 ATH, at 29,100. Breaching this too will turn focus straight towards the 78.6% Fibonacci level at 18,300.
In the opposite scenario, where the bulls generate the required traction to steer the price higher, an initial hindrance could arise from the cloud’s lower surface and the adjacent Tenkan-sen line, residing around 42,800. Overstepping these barriers, the price will likely navigate to the 38.2% Fibonacci retracement of the November – January down-leg at 46,900 and the neighboring March high of 48,500. Next, the bulls may then pursue the 61.8% Fibonacci retracement level at 55,500.
To summarize, despite the positive start of the week, Bitcoin keeps facing notable downside risks and a drop below the 33,000 floor will critically downgrade the long-term technical picture.