However, a comprehensive technical analysis suggests this may not signal a reversal of the primary trend. On the monthly chart, Bitcoin has sustained a prolonged rally without a significant correction. A pullback is not only expected but is characteristic of a healthy bull market. Applying a Fibonacci retracement tool to the current cycle reveals that a correction to the $91,000-$102,000 range would still maintain the market’s bullish structure of creating higher lows. Historically, a sharp decline in an uptrend is often followed by a retest of those lows. Furthermore, there are substantial liquidity pools located above the current price. It is arguably more profitable for large players to drive the price upward to capture this liquidity than to continue pushing it down, suggesting any further decline may be short-lived.
New Words:
1. Leverage: The use of borrowed capital to invest, which can amplify both profits and losses. For example, 5x leverage means for every $1 you have, you can trade with $5.Example: Using leverage in trading can be very risky but also highly profitable.
2. Bearish: A market sentiment characterized by the belief that prices will fall. An investor who expects a price decline is called a “bear.”
Example: The analyst had a bearish outlook on the economy for the next quarter.
3. Fibonacci retracement: A technical analysis tool used by traders to identify potential support and resistance levels. It is based on key numbers identified by the mathematician Leonardo Fibonacci.
Example: The trader used Fibonacci retracement to predict where the stock price might stop falling.