Bitcoin nears extreme greed, analyst sees pullback to $74.500

Bitcoin is at $85.200 after a rise of 4.2% in the past 24 hours and is above $85.000 for the first time in months. The Fear & Greed Index is meanwhile approaching the extreme greed area. One analyst suggests this need not be a warning signal, but points to technical signals that could allow a temporary correction towards $74.500.

Bitcoin is available at OKX and Bybit.

In brief:

• The Fear & Greed Index is approaching the extreme greed area after the break above the structural May level.
• An analyst sees technical signals pointing to a possible correction towards around $74.500.
• According to the analyst, elevated sentiment at the start of a bull cycle is normal and does not have to mean the rise is over.

Sentiment rises as latecomers enter

The crypto Fear & Greed Index is approaching the extreme greed area. Analyst Darkfost sees this as a logical consequence of the recent price movement. Bitcoin broke through a structural resistance level that had held since May, after which a group of latecomers entered and the general market sentiment shifted.

Darkfost notes that euphoria and broad consensus typically emerge at the end of a move, but that at the start of a bull cycle sentiment can remain in greedy territory for a longer period. In his view, it only becomes a signal when the last sceptics switch sides too.

Elliott Wave points to possible pullback to $74.500

In a second analysis, Darkfost discusses a technical pattern on the daily chart. Bitcoin has reached the Fibonacci extension associated with the completion of an Elliott Wave pattern, specifically wave five. The analyst does not rule out a small overshoot, in which the price could rise somewhat further while the RSI shows a bearish divergence.

Technically, Darkfost already sees a lower high on the daily RSI, while the price is actually posting a higher high. If this pattern is confirmed as wave I, he says a wave II will follow. That corrective wave typically revolves around a 0.382 Fibonacci retracement, which equates to a price level of around $74.500. That level coincides with the 50 and 200-day moving averages, which makes it extra relevant as a support level.

The analyst does not want this to be read as a bearish expectation. As he himself notes: Bitcoin never rises in a straight line. A temporary pullback after a strong break through the zone of short liquidations above $85.000 fits a healthy recovery pattern. The 3-hour RSI is now in overheated territory, which further increases the chance of a brief breather.