Bitcoin price correction begins — Here’s how low BTC can go

The price of Bitcoin (BTC) has been seeing a massive run in recent months as it surged by almost 100% from $10,000 to $19,800. However, the all-time high region at $20,000 has been showing significant resistance, causing the price to drop several times including today as BTC has now fall below $19,000 on Dec. 4.

The chances of a correction have been slowly increasing amid diminishing volume in recent days. Multiple arguments can be made for a deeper correction, which wouldn’t necessarily be bad for the market in general. 

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All-time high region still major resistance

BTC/USD 1-day chart. Source: TradingView

The all-time high region has not been broken yet, as the chart shows. This is not unexpected, however, as many retail investors will have the all-time high of 2017 as a marker for potential profit-taking. It’s the final hurdle before Bitcoin goes into price discovery, which would make the next targets difficult to determine.

Given that Bitcoin’s price reached the all-time high in a nearly vertical manner, a clear-cut breakout above the all-time high doesn’t seem likely to occur at this point.

However, as long as Bitcoin’s price remains in this region, several arguments can be made for a potential correction.

Specifically, the volume is dropping severely on the recent attempt to break $20,000 indicating potential weakening of momentum. Second, the current all-time high tests open the door for a possible bearish divergence on the daily timeframe.

This bearish divergence isn’t confirmed yet, but it shows some potential signals of a slight trend reversal. In case of a correction, the key areas to watch for support are $16,000 and $14,000.

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The 2014 high didn’t break in one-go either

BTC/USD 1-day chart 2016. Source: TradingView

The current price action is comparable to the price action in the previous cycle. The 2014 peak high acted as the final resistance, after which a significant correction of 30% took place.

This correction often leads back to the previous resistance, and as the chart shows, this resistance was at $800.

The previous high then flipped for support through that correction, which caused the price of Bitcoin to continue rallying to new all-time highs.

BTC/USD 3-day chart. Source: TradingView

As markets often act the same way in every cycle, a similar correction of 30% would put the price of Bitcoin at $14,000. Additionally, the previous high in June 2019 is also at $14,000, making it a likely target for a potential support/resistance flip.

Such a correction of 30% wouldn’t be unhealthy for the market and is quite common. It may also give latecomers a beautiful entry opportunity to boot.

Levels to watch on the lower timeframes

BTC/USD 1-hour chart. Source: TradingView

The lower timeframes are indicating a potential reversal is in the making. The range is defined, with the support at the green zone around $18,500. This level has to hold for support to sustain the upward momentum.

If it fails to sustain support, the $16,000 area’s retest is very likely. However, if the market wants to maintain bullish momentum, the upper resistance at $19,500 needs to break to warrant further continuation. However, a classic bearish support/resistance flip is occurring here.