Today as the closing bell rang at Wall Street, Bitcoin (BTC) price corrected sharply, pulling back below $6,000 less than 24-hours after hitting a 7-day high at $6,900. The $1,000 drop from $6,670 to $5,670 is sure to have shocked investors as it is slightly below analyst’s price correction estimates but at the time of writing it appears that traders are buying into the dip.

Crypto market daily performance. Source: Coin360

The price has bounced at $5,700 and currently bulls are pushing it back above $6,200. After this week’s stellar 82.4% recovery from $3,775, Bitcoin was somewhat overdue for a pullback and as discussed in previous analysis the price was expected to retest underlying support at either $5,900, $5,500 or $5,380.

BTC USDT 4-hour chart. Source: TradingView

Despite the $1,000 drop to $5,670, the RSI on the 4-hour timeframe remains in an uptrend, above the ascending trendline in bullish territory with a reading of 62.

The MACD has begun to curve down from the overbought region but the momentum on the histogram remains steady and buy volume is on par with the sell volume that preceded the pullback.

If bulls can reclaim the $6,400 level and close here that would be a victory for Bitcoin price.

What to watch for

Over the next 4 to 6 hours, traders should keep an eye on trading volume on the shorter time frames and also watch to see if the RSI dips below the rising trendline on the 4-hour timeframe.

There is also a Dragonfly Doji candle on the 4-hour chart suggesting that even though bulls absorbed the selling by buying into the pullback there is still the possibility of a short-term trend reversal, as hinted by the MACD, RSI and ailing purchasing volume.

BTC USDT daily chart. Source: TradingView

In the event of a short-term trend reversal, traders will look for a bounce at the $5,450 support where a high volume node of the volume profile visible range resides. Ultimately, after a strong upsurge from the weekly low, Bitcoin needed to retest underlying support anyhow, hence the reason bulls have strongly bought into the current dip. 

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.