After three days of trading in a tightening range Bitcoin price (BTC) dropped below $8,300, stopping at $8,264 which is slightly below the $8,300 support and the 200-daily moving average (DMA) at $8,200.

Earlier in the day John Bollinger, the creator of the popular Bollinger Bands indicator, tweeted that the recent pullback should not alarm investors. Bollinger said:

“This is a ‘logical place’ for $btcusd to find support, a pullback to a breakout level and the middle BB.”

Cryptocurrency market weekly overview. Source: Coin360

As mentioned in the previous analysis, many traders still anticipate that the price will drop to $8,200 where buyers looking to purchase the dip supposedly await. Currently, the volume profile visible range (VPVR) shows a high volume node at $8,200 where the 200-DMA is located.

BTC USD daily chart. Source: TradingView

Based on the most recent price action, if Bitcoin price drops below $8,200 traders may look for a bounce at the 50-DMA at $8,000 and below this point, the price could retrace to $7,600 which is aligned with the lower band of the Bollinger Band indicator.

BTC USD daily chart. Source: TradingView

On the daily time frame, the moving average convergence divergence (MACD) has already crossed below the signal line, printing a red (negative) candle on the histogram and the relative strength index (RSI) on the verge of dropping below 50. Trading volume has also tapered off and the Bollinger Bands remain wide, suggesting further downside as the most likely scenario if the price drops below the 200-DMA.

In the shorter time frame, we can see that bulls have been fighting to hold the $8,300 support and the RSI and MACD are fast approaching oversold regions.

Traders looking to play an oversold bounce will be watching $8,100 where the former descending channel trendline resides. Below this is the 200-DMA which is centered between the 50% and 61.8% Fibonacci Retracement levels.

BTC USD 6-hour chart. Source: TradingView

If an oversold bounce produces a strong response that allows Bitcoin to reclaim the 50-EMA traders will watch to see if $8,500 presents resistance. Above $8,500 it’s possible that the high volume VPVR node at $8,623 could function as a difficult level of resistance. To restore the uptrend, traders will need to push and hold Bitcoin price above $8,800 and $9,134.

Bitcoin daily price chart. Source: Coin360

The overall cryptocurrency market cap now stands at $228.9 billion and Bitcoin’s dominance rate is at 63.3%. The majority of top-10 altcoins followed Bitcoin’s price action with Bitcoin SV (BSV) tumbling 9.33%, Bitcoin Cash (BCH) 7.86% and Litecoin (LTC) 6.51%.