A sudden plunge below $38,600 was expected to trigger panic mode among market participants. Nonetheless, a good buying opportunity was spotted and the price was prevented from continuing its steep downtrend. However, the downward cloud is not completely gone, and the possibility of a reasonable recovery may not end. While the price indicates a higher possibility of double price action, it is now important to capture the best action on the play.
Since the BTC price was rejected at a yearly high of $48,969, bulls have been trying to trigger micro-recoveries on a regular basis. However, traders should be extremely cautious at this point as the current bounce may not be considered a recovery. With the price staying within the downward range and continuously making lower highs and lows, an intermediate bounce cannot change the direction of the trend. Rather, it can cause a huge downtrend and pave the way for the formation of a huge bearish candle.
Recent price action shows that the price is following a specific pattern after reaching local highs. Prices fall by 5-6%, then retrace slightly and fall by another 5%. So, while RSI continues to remain weak while volume remains weak, the ongoing marginal recovery could certainly lead to a new downtrend.
On the other hand, the Bitcoin halving is just a few months away, and at this stage the BTC price is typically consolidating. During previous halvings, prices retraced more than 50% in the months leading up to the event. Therefore, the ongoing bearish trend appears to be a normal process of bulls starting a subtle uptrend and preparing to trigger a bullish run after the halving.