On March 16 Bitcoin (BTC) price bounced back above the $5,000 barrier, while equity markets in the United states of america saw their worst mean solar day since 1987. Traditional markets closed 13% lower than the previous day, highlighting the severity of the current crash but for the time being at to the lowest degree Bitcoin is holding upwards.

Cryptomarket daily performance. Source: Coin360

Bitcoin moving in a narrowing range

BTC USDT one-hour nautical chart. Source: TradingView

Bitcoin cost is moving inside a narrow range, through which the $five,600-$5,750 range serves as resistance and $four,800-$four,900 is the support. The i-hour nautical chart shows ii anomalies, as the price tried to break to the upside and failed. Similarly, the toll of Bitcoin broke below the range and immediately jumped back in.

BTC USD 4-hour nautical chart. Source: TradingView

The 4-60 minutes nautical chart is showing a articulate bullish departure, which implies a short term bottom formation and reversal is on the horizon. All the same, such a divergence doesn't imply a full reversal, unless the divergence shows upwardly on higher time frames (in this case referring to time frames from daily and college).

Earlier examples have shown that a bullish divergence on the iv-hour opens the scenario for some upwards relief, as the price action in November 2022 shows.

BTC USD 4-hr chart. Source: TradingView

Such a bounce up is confluent with the CME gap around $5,900-$6,000, which would support the argument for such a motility. On average, 90-95% of the gaps are closed. As the price of Bitcoin has several gaps on the CME chart, the first one to exist closed soon should be the gap at $v,900-$6,000.

Yet, does such a bounciness imply a full reversal? No. It should be a short term relief in the opposite mode, also known equally a dead true cat bounce.

For a total trend reversal, investors should generally expect the lower levels to be tested for a double bottom formation. Another statement would be a bullish divergence on higher time frames, which commonly implies a bottom structure.

Are equity markets ready for a relief bounciness?

The equity markets take seen a massive selloff lately, causing the equity fear and greed index to hit stone bottom. Traders and investors are already comparing the contempo collapse to the market place corrections that took place in 1929, 1987 and 2000.

The equity markets have seen a selloff between xxx-40%, causing some individual stocks to drop around 70%.

German stock index DAX 1-calendar week nautical chart. Source: TradingView

If the markets are similar to either of these examples, the data from those periods can be compared to the contempo movements. Of class, the coronavirus is a unique case for the markets, equally the market meltdowns in 2000 and 1987 had different reasons also. However, markets tend to motion the same due to homo psychology.

When bubbles popular, the offset dropdown is betwixt 35-50% before a relief bounciness occurs. This relief bounce is often referred to as a "dead cat bounciness" or the "bull trap," which makes investors believe everything is fine.

Information from history prove similar movements. The Nasdaq 100 Index shows a forty% dropdown during the Dot.com bubble of 2000, after which 4-6 months with upwards momentum occurred.

Nasdaq 100 Index 1-calendar week nautical chart. Source: TradingView

A similar percentage is found in the offset drop of Bitcoin in January 2022, just after the bubble popped in December 2022. The price dropped from $nineteen,700 to $ten,800, a decline of 45% since the elevation. Afterwards this, the price of Bitcoin rallied from $10,800 to $17,000 before the bearish momentum and conduct market connected.

BTC USD 1-day nautical chart. Source: TradingView

As the disinterestedness markets have seen a selloff betwixt 30-forty% and momentum is exceptionally surly, it wouldn't be a surprise to see the exact reverse happen to the market for the coming weeks. Such a short term up could indicate that the markets are going to exist light-green for Bitcoin and crypto too.

Why should that be? Recently, every market has been showing a positive correlation with each other. Gold, just also Bitcoin has dropped significantly as investors sought to become rid of their risky assets to comprehend losses on the equity markets.

The moment that equity markets recover some of their losses, a like thing should occur for the other markets. However, this is not a point that the crypto market is bottoming. Therefore, we demand more time and data to confirm.

What is likely to happen in the Bitcoin market?

BTC USD 2-hour nautical chart. Source: TradingView

Equally the price of Bitcoin held the $iv,800 area for support, it'southward near likely to test the range highs, confluent with the CME gap in this area. Aside from that, it's possible to look a short-term relief rally on the equity markets, which would suit some upwards momentum on Bitcoin.

Notably, there's a bullish divergence giving another argument for some short term rallies. The master targets for such a rally would exist the $5,600-$v,800 resistance and the $6,000-$6,100 level.

Conspicuously, if these zones aren't cleaved, the lower levels will then need to be tested again. Hence, retests of $4,800, $4,200 or fifty-fifty $3,750 are not out of the woods.

Bottom formations have time, and with the current economic instabilities, it's isn't certain how long this period will terminal and when the coronavirus volition ultimately receed.

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