Bitcoin performed well in recent days, after having registered a strong recession in the first two weeks of September. This rally began in the middle of this week after the Fed decided to reduce the benchmark interest rate by 50 basis points (bps), a move that proved positive for cryptocurrencies.
Notably, this rally has already been predicted by some crypto analysts using technical indicators. One of them is Ali Martinez, who is a master of TD Sequential. However, in an interesting twist, the analyst highlighted the need for investors to “book some profits,” which is a sign of a potential price correction in the future.
Analyzing the Bitcoin Rally
Bitcoin, which struggled to gain momentum earlier in the month, entered a strong recovery that began to take shape mid-week. This rally saw Bitcoin break above $63,000 again and increase your market dominancee. Furthermore, the high peaked at $63,830, reflecting an increase of about 20.77% from the low of $52,827 on September 6.
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However, despite the current optimism surrounding Bitcoin’s price action, Martinez issued a word of caution to investors. In a post shared on social media platform X, Martinez highlighted that the TD Sequential, a tool he frequently uses to analyze market trends, now indicates the potential for a price correction near the $63,700 level.
Martinez highlighted that the same TD Sequential indicator that issued a buy signal at $57,400 prior to Bitcoin’s recent rally is now warning of a potential pullback. This suggests that while the recent surge has been notable, the market may be approaching a critical juncture where prices could pull back.
TD Sequential told you to buy #Bitcoin at $57,400, and now he’s telling you to book some profits at $63,700! pic.twitter.com/0h1yNowkae
-Ali (@ali_charts) September 20, 2024
Is it time to sell?
Looking at Bitcoin’s price action since July, the $63,000 that acted as an order block at the start of the year has largely acted as the beginning of a resistance level during price increases. However, while the TD Sequential signals a possible price correction, Bitcoin bulls are still testing the confirmation of a continued recovery.
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According to another analysis By Ali Martinez, Bitcoin is now testing the 200-day SMA, which is a critical level for confirming bull runs. History shows that failure to break above the 200-day SMA has led to significant corrections in the past. If history repeats itself, it could lead to a correction to $40,000 before the end of the year.
Recent market dynamics and fundamentals have shown that Bitcoin is now in a better position than in the past. There are now bullish catalysts within the ecosystem, such as Spot Bitcoin ETFs, that would prevent a correction of such magnitude. Furthermore, a green monthly closing in September could better pave the way for a green ‘Uptober’, leading to continued recovery in October.
However, the $63,000 price level and the 200 SMA of $63,900 are important to watch for Bitcoin moving forward.
Featured image created with Dall.E, chart from Tradingview.com
