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The price of Bitcoin (BTC) dropped to $ 15,670 on Binance on November 15th. The highly volatile decline came hours after BTC hit $ 16,355, demonstrating strong momentum.
Three key factors likely caused the Bitcoin price to drop overnight. The three potential factors are a weekend shakeout, a retest of the daily moving average (MA) test, and a retest of the parabola.
Weekend shocks and lower support reps are healthy
As Cointelegraph reported, algorithmic traders expected a weekend drop in the Bitcoin market to materialize.
There was a stack of sell orders over $ 16,500 that were not withdrawn when the price approached $ 16,400. This meant that the orders were genuine sell orders, applying selling pressure on the cryptocurrency market.
On top of the market structure that likely encouraged short traders and robots, on-chain analyst Willy Woo said weekend volatility is bullish.
He said he is expected to shake off the “bearish technicians”, but the market still remains in “buy the dip” territory. He he wrote:
“Weekend trading setup: shake off some bearish technical aspects (4h RSI div, 8h TD9). The fundamentals of the short and medium term chain are bullish, more coins raised from exchanges, more users arriving. Buy the fall scenery “.
The drop in purchases reflects the bullish momentum
On the daily chart, the drop to $ 15.6k confirmed a retest of the 10-day moving average. The new test was important because last week, following a massive price hike, BTC retested the same MA before continuing.
If the price of Bitcoin had continued to fall below the 10-day moving average, it would have meant a further breakdown. However, the immediate recovery from the same level it recovered from during the November 7 decline is relatively positive in the short term.
On November 7, BTC saw a similar decline, albeit in a different price range. The price plunged sharply from $ 15,753 to $ 14,344, recording a 5% drop. The dominant cryptocurrency also recovered from the 10-day moving average on the day’s daily chart.
Over the following days, BTC hit a two-year high at $ 16,480, confirming a strong breakout.
Parabolic advances require new tests
Josh Olszewicz, graphic designer and cryptocurrency technical analyst, shared a chart which shows that Bitcoin is in a parable.
During a parabolic uptrend, the momentum of an asset continues to grow as the price rises. However, if the parabolic cycle breaks, an asset can be at risk of a strong pullback.
In the short term, Bitcoin’s parabola remains intact as long as BTC remains above the $ 15,300 to $ 15,500 range.
Traders and technical analysts have spotted similar levels in the past 24 hours. Likewise Michael van de Poppe, a full time trader on the Amsterdam Stock Exchange She said that the support level of $ 15,500 remains the key to BTC in the short term.
In the short term, Bitcoin would need to see continued resilience above $ 15,500 and ideally defend the $ 15,700 support as it has done over the past 24 hours.
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