Bitcoin is showing early signs recovery after holding the main confluence support zone firmly. A sturdy reaction at this level suggests that buyers have moved in to absorb the selling pressure. As the market begins to stabilize, attention now turns to whether this defense could mark the beginning of a broader bullish reversal.

How Bitcoin protects the main confluence zone

Bitcoin has successfully defended its major confluence zone and is starting to show early signs of recovery. According to Cryptorphic, after consolidating around the 200-week EMA and the weekly fair value gap between $70,000 and $76,000, market behavior appears to be shifting from absorption to the early stages of a potential trend reversal.

From a key perspective, the recovered support zone is currently between $70,500 and $73,900, where buyers have stepped in to stabilize market. On the other hand, resistance is in the range of $80,600 to $85,000, which represents another major obstacle for the bulls. However, the bullish outlook would be invalidated if Bitcoin records a weekly close below the $68,000 level.

The latest technical developments also support the improved design. The last weekly candle formed a sturdy position bullish setup right at the 200-week EMA, indicating that the earlier wave of aggressive selling pressure has been absorbed by sturdy demand. The price also recovered to the $73,900 level, effectively turning the former demand zone back into an busy support area.

The long lower wicks seen on the previous weekly candles further support this opinion. Instead of random noise, they indicate continued buying interest and institutional accumulation during the pullback. In a situation where selling pressure appears to be easing, path at least resistance now appears tilted towards the upper limits of the previous range.

BTC breaks out of local compression

Charting a path forward, Cryptorphic noted that Bitcoin appears to be emerging from the immediate phase of local compression. If the price is able to stay above the level of $74,000, it will confirm the thesis that a base from higher time frames has already been formed. In this scenario, the next key target for bulls would be a move towards $80,600, a level that previously served as breakdown point.

If Bitcoin manages to break above the $85,000 mark, the outlook could change even more decisively upwards. A break above this resistance is expected to trigger a up-to-date, impulsive move, potentially towards the psychological milestone of $100,000.

From a broader perspective, the sentiment remains bullish. The recent correction is over and the sturdy reaction at the 200-week EMA suggests that the market structure was successfully defended. As such, the environment continues to favor a long-term buy-on-the-dip strategy, with the market potentially rewarding those who raised funds during the retest of the $70,000 region.

Featured image from Pixabay, chart from Tradingview.com