(MENAFN- Daily Forex)

• Bitcoin showed a sharp early drop before reversing into a hammer near $92,500, hinting at an oversold bounce.
• The key battleground remains $100,000, with failure there risking deeper losses and a break signaling possible trend recovery.

Bitcoin fell to extreme levels during the early hours on Tuesday but then turned around to show signs of life. As we headed towards the end of the day, we formed a nice hammer, and, interestingly, it formed right at the $92,500 level because this is an area that had been important previously. The question at this point in time is whether or not we can keep up the momentum to the upside and break higher.

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I suspect at this point the market just found itself to be far too oversold and that a potential bounce is getting ready to occur. The real rubber meets the road at the $100,000 level. So, if we rally from here and fail to get above there, then I think it's just a bump along the way to much lower levels, perhaps down to the $80,000 level before it's all said and done.$100k is ImportantEURUSD Chart by TradingView

If we can recapture the $100,000 level, then we have a real shot at potentially trying to change the trend to the upside again. It'll be interesting to see how this plays out because Bitcoin has been horrible for months, but the acceleration of the selling probably got far too ahead of itself because, after all, institutions still own this thing even though it's not really being used for anything in the real world.

If we could break above the $100,000 level, then I think the healthiest thing you can see is a bit of sideways action where you just simply accept the price there. If we break down below the lows of the trading session on Tuesday, I think the selling truly kicks off and we see yet another leg lower.

The 50-day EMA breaking down below the 200-day EMA kicks off the so-called death cross, which, of course, is a negative turn of events. And a lot of people will be looking at that as a longer-term sell signal. It normally is pretty late, but it is something worth paying attention to. That being said, I think the short-term bounce needs to be watched, but I'd be very careful here.

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