Bitcoin Crash Hits $66K Support: Relief Bounce Incoming But More Pain Ahead

Tuesday saw a continuation of Bitcoin’s crash out of its 4-month bear flag. The price continued to plummet following Monday’s breakdown out of the bear flag and it was only the important $66K horizontal level that stopped the fall. A relief bounce has already begun, but more pain could be on the way once this has played out. Relief bounce into very negative market sentiment Source: TradingView The descent so far from the top of the bear flag to the recent local bottom is around 20.6%, or in dollar terms $17,000. Quite some correction already. Although there is possibly a lot more to come. As can be seen in the 4-hour chart above, once the $BTC price fell out of the bear flag, it was more or less straight down to the main horizontal support at $66,000 . Now heavily oversold, a relief rally would be expected, and which has already begun. The price has come back to the new resistance at $67,200, and besides having to break this, there are also two descending trendlines to be dealt with by the bulls. The first and shorter one is the recent downtrend from the bear flag break. Until this is broken we can expect the price to continue to trend down. The other much longer trendline guides the price down through the bear flag. Here it might be expected that the price at least comes back up to confirm the breakdown. As can be seen with the Stochastic RSI, the indicator lines are at the bottom and angled up. This is the same for the other shorter-term time frames, so potential upside momentum is going to be battling against dreadful market sentiment . Could this encourage the price to go sideways for a while? Could yet another bear flag form? Oversold vs. negative sentiment = bear flag? Source: TradingView The added bear flag in this daily time frame chart is pure speculation. It should probably be a lot shorter, but what it does do is explain how the $BTC price could react in the scenario of a very bearish market opposed to very oversold conditions. Of course, the bounce could go higher or the drop could resume as market forces do their thing. As it stands, the bears are very much in control. The bulls did have their day in the sun when the price hit the top of the bear flag, but it was still a bear flag, and once the rejection came in, it’s been downward ever since. Bitcoin is in a bear market - it’s pure and simple. Until a bottom has been painfully carved out, and real capitulation has taken place, the next bull market will remain in abeyance. 200-week SMA could help to predict bear market bottom Source: TradingView The weekly chart for the $BTC price provides a thought-provoking picture. The bull market trendline is not far below the price now. What is very interesting is how the 200-week SMA has followed this trendline almost exactly. These are potentially going to provide a major barrier to a further fall in the price. Nevertheless, if we look left at the last bear market, it can be noted that the $BTC price did fall below the 200-week moving average. It might also be interesting to know that the furthest the price got from the bottom of the 200-week SMA was a pretty hefty 33%. If we transplanted that situation to the current one, 33% below the 200-week SMA would take the price down to the low $40K area. $44,700 is already earmarked as the full measured move out of the bear flag. Could a bottom materialise in this vicinity? Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.