The last few days have seen some remarkable price action for bitcoin. From a high of $778 on June 17, 2016 price dropped an astounding 30% to $540 on June 22.The good news is that price made a classic double bottom and has now rebounded to $624 at this time. The double bottom is illustrated in the following hourly price graph on Bitstamp:The bitcoin bull market suffered a setback but is still in force. Price had increased too far, too fast and a correction was due. However within a day bitcoin gained back 11% of its value. If you cannot handle the price swings in bitcoin you probably should not be trading it. Remember we advised our readers back in November 2015 that bitcoin was a strong buy at $360. Even with the correction yesterday price is back up to $624 or a 73% gain in 7 months.The first chart shows the Fibonacci levels from the swing high to swing low. Price has recovered to the $631 level and stalled. The quicker price reaches the 50% Fibonacci level of $659 the better. I consider this price action, though significant, a correction in a bitcoin bull market. Once the 61.8% Fibonacci level of $688 is taken out I think we will be on the way to a new all time high.The drop to $540 meant astute traders picked up cheap bitcoin. Long term investors should hold bitcoin at this time and increase your position on sharp pullbacks. It has happened before and will happen again, that is the nature of bitcoin.What does the future hold? Here is a chart with Fibonacci price extensions drawn from the most recent $778 swing high to swing low of $542:The 161.8% Fibonacci extension gives a price target of $926. By coincidence it is interesting to see that the next 261.8% extension overlaps the all time high on Bitstamp. This extension overlaps the all time high because of the following chart:You can see that strong support at $538 was predicted before the correction occurred. Further proof that Fibonacci analysis is a powerful tool to analyze and predict support and resistance levels for Bitcoin.Update June 25 2016Bitcoin price on Bitstamp has made a double bottom and has advanced past the 50% weekly retracement level of $658 which is an important level to hold.There is strong overhead resistance at the 61.8% Fibonacci level of $688 which also coincides with the $683 top made May 2014. Once Bitstamp breaches $690 on volume the major overhead resistance will have been taken out paving the way for a new all time high.Bitcoin has entered a trading range bounded by the 61.8% Fibonacci level of $688 and 38.2% level of $631 as shown on the most recent chart below. Watch the trading range for a breakout either way.