Following an almost 40% retrace of the cryptocurrency market, Bitcoin and other digital assets fell below important support levels, which added more risk to the table for crypto traders and investors, but thanks to the potential capitulation, BTC recovered above $30,000 and formed a potential support zone, per TradingView.
Bitcoin daily chart
The daily chart is one of the most commonly used timeframes for mid-term BTC trading, which makes it the ultimate tool for determining local support and resistance zones. As for now, Bitcoin successfully broke through $30,000 and remains on an important support level of $30,000.
The first cryptocurrency has already tested this level many times back in the May-July period of 2021. The digital gold successfully bounced off the support four times, but there is no guarantee that it will happen again.
Yesterday, Bitcoin briefly broke through the support level, dropping below $27,000 and even testing the $25,000 zone. Though the first cryptocurrency was close to breaking down, the existing buying power allowed it to spike up, creating a "knife" on the daily chart.
Additional technical indicators
Besides various support and resistance levels, traders use technical indicators that give them a hint about the current conditions of the market. One of these indicators is the Relative Strength Index, which shows the oversold or overbought levels.
At press time, RSI shows the first upward movement since the beginning of the month, hinting at the potential short-term reversal after dropping to the lowest level since January. If the RSI moves above the value of 30, Bitcoin would no longer be considered oversold.