Last week, traders booked profits in the big technology stocks, which dragged the US stock markets into the red. This affected sentiment in the crypto markets as traders booked profits in several tokens tied to the DeFi platforms and in the altcoins that had run up sharply in the past few weeks.

It is difficult to predict whether the current correction is the start of a deeper decline or if this is a good buying opportunity. As long as Bitcoin’s price stays above the $10,000 levels, the sentiment remains positive. 

However, traders should not be in a hurry to establish long positions until a bottom is confirmed. Let’s do the Bitcoin price trend analysis of the weekly chart to find out the path of least resistance.

Bitcoin price technical analysis: weekly chart

Bitcoin plunged 12.43 per cent last week to end at $10,258.70. This sharp fall has pulled down the price below the neckline of the inverse head-and-shoulders pattern and has also broken below the rising wedge, both of which are negative developments.

Although the bulls have managed to keep the price above the psychological level of $10,000, the failure to achieve a strong rebound off it suggests that the traders are not confident that the correction has ended.

Currently, both moving averages are flat and the RSI is just above the midpoint, which suggests a balance between supply and demand.

If the bears sink the price below the 20-week EMA, it will be a huge negative and can result in a drop to the 50-week SMA. 

If the BTC to USD pair rebounds off the current levels, it is likely to face resistance at $11,100 but if the bulls can push the price above it, then it will suggest that the correction might be over.

The Bitcoin price weekly analysis shows that the sentiment has turned around last week from bullish to bearish. Do the chart patterns on the daily chart point to a possible rebound or is the correction likely to continue? Let’s do the BTC price analysis of the daily chart to find out. 

Bitcoin price technical analysis: daily chart

The daily chart shows that Bitcoin has been consolidating in a tight range since the sharp fall on September 3. If the bulls fail to push the price above $10,616.25 within the next few days, the bears are likely to resume the correction.

The moving averages have completed a bearish crossover and the RSI has been trading in the negative zone for the past few days, which suggests that the bears are in command in the short-term.

If the bears can sink the price below $9,832.05, the next leg of the down move is likely to start.

Even if the bulls push the price above $10,616.25, they will again face stiff resistance at the 20-day EMA, which is sloping down.

How to trade Bitcoin this week

Bitcoin is currently at a critical level. If the bears can sink and sustain the price below $10,000 it is likely to hurt sentiment, which could result in aggressive selling by the bears.

Traders can consider opening short positions with a suitable stop-loss if the price dips and sustains below $9,800 for four hours. 

Conversely, aggressive traders can consider opening long positions if the price sustains above $10,700.

However, these trades should only be attempted by the short-term traders because the price action is likely to remain volatile for the next few days. The position size of the trades can be about 40 per cent of usual.

FURTHER READING: Bitcoin explained simply: everything you need to know

FURTHER READING: Bitcoin vs Bitcoin Cash vs Bitcoin SV: the ultimate guide