As 40-year trading veteran Peter Brandt pointed out since Bitcoin broke above $10,000, the market entered a fear-of-missing-out (FOMO) phase that took BTC to almost $14,000 within less than a week, giving signs that a correction was underway.

The "Obnoxious-Twitter-Millennial-Index" (OTMI) is registering extreme FOMO. That is always a sign to consider taking some money off the table. pic.twitter.com/t0t1NVo3Ys

— Peter Brandt (@PeterLBrandt) June 22, 2019

Now that BTC is indeed correcting, the question becomes, “how low can Bitcoin go?”

The Fibonacci retracement indicator is a technical index composed of horizontal lines that refer to areas of support and resistance associated with a percentage based on how much of a prior move the price has pulled back. It basically pinpoints the different price levels that could act as barriers as Bitcoin rises or retraces due to the high concentration of supply or demand around them.

Based on the 3-day chart BTC broke above the 50 percent Fibonacci retracement area that sits around $11,500 with enough volume to reach the 61.8 percent level at $13,500. This Fibonacci price point appears to have been taken as a “take profit” zone for many traders which has the potential to induce a correction down to $9,600, where the 38.2 percent Fibonacci is if the selling pressure continues to increase, but first, it will have to move below the 50 percent level.

A similar scenario happened around mid-2016. After Bitcoin reached the bottom at $164 on Jan. 14, 2015, it began a parabolic move that took it up almost 380 percent to reach the 61.8 percent Fibonacci retracement level at $790. This was an exhaustion point that was followed by a 38.37 percent correction taking BTC down below to the 38.2 percent Fibonacci retracement level.

The 12-hour chart adds credibility to the idea that a correction to around $9,600 could indeed be possible as it seems like a spinning top candlestick pattern had developed. This candlestick formation represents indecision about the future of Bitcoin since neither the buyers nor the sellers were able to take control of the price action. However, the spinning top was created due to BTC’s prior major upswing BTC. It could be signaling a reversal that’s confirmed by the succeeding red candlestick.

If this cryptocurrency happens to break below the 7-twelve-hour moving average, a further drop down to the 30 or 50-twelve-hour moving average could be expected, which is exactly where the 38.2 percent Fibonacci is around $9,600.

Nonetheless, the 4-hour chart in a sense contradicts what can be seen in the bigger timeframes because Bitcoin’s price action has basically been contained between two upward sloping parallel lines since June 10 that has allowed it to make higher highs and higher lows as it moves.

If BTC continues trading inside the ascending parallel channel, then the bottom of the channel—around $11,600—could act as strong support that bounces off the market valuation of this cryptocurrency to new yearly highs. But, breaking below the channel will increase could confirm that a pullback down to around $9,600 is underway.

After the recent parabolic movement, a correction is needed for the healthy continuation of the bullish trend. In the previous bull market of 2017, 30 to 40 percent pullbacks were often followed by higher highs.

Although the current bull run has not seen a major correction, until now, the Fibonacci retracement levels could be signaling that a 30 percent correction from the recent high of $13,900 is possible and could take Bitcoin down to around $9,600. It remains to be seen if the buying pressure picks up once again to take this cryptocurrency to new yearly highs.

The post After the recent parabolic move, Bitcoin shows signs of dropping to $9,600 appeared first on CryptoSlate.

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