In this update we delve deeper into the current state of affairs surrounding the Bitcoin price. We explore the crucial price levels that will be important in case a breakout occurs soon. With the market at a crossroads, our analysis provides insight into both the potential for further upside and the risks of a possible downside correction. Read on to be prepared for Bitcoin’s next big price move.
Bitcoin (BTC) 1 hour chart
In our last update, titled ‘Continuation of Uptrend or Time for a Correction?’, we discussed how bullish we were on Bitcoin on all relevant timeframes, from high to low. We saw no weakness and expected the current bullish trend to continue as long as this situation persisted.
We have identified a specific moment on the 1-hour chart as the first warning sign. This is when trend support at the 200-day moving averages (MAs), coupled with the support area just above $50,000, came into play.
Last Wednesday, the price reached this support zone and so far it has held. We recently tested the support for a second time, which is visible by black arrows on the chart. Since yesterday, after testing support, the price is unable to break above the 200 MAs, indicating a bearish re-test. The longer we stay below this trend support and the more often the support is tested, the more likely we are to eventually break through to the downside.
Still, until we actually break through to the downside, the trend on this shorter time frame remains sideways within a narrow price range of just 3% ($50,770 – $52,500). The previous times that the bottom of this range was tested, an increase to the top of the range followed. So why wouldn’t that happen again? After all, this is typical behavior for a price range. The only bearish argument right now is that we are trading below trend support.
What we can say with certainty is that sooner or later there will be an outbreak. The direction of this outbreak remains exciting and will also determine the short-term direction. For now, it’s wise to be cautious. We are keeping a close eye on the bottom of the range at $50,770, the support area below, and the 200 MAs.
Bitcoin (BTC) 4 hour chart
If we take the 4-hour chart, we can indicate important price levels in case a breakout occurs soon.
In an upside breakout, we focus our attention mainly on All-Time High resistance around $59,000. Just below that, around $57,000, lies another smaller resistance area. As long as there is no downward breakout, this still remains a realistic scenario for the short term.
If we experience a downward breakout, it is likely that the price will want to return to the 200 MAs after a long time for a bullish re-test. Such a downward move will see the MAs squeeze closer together, somewhere around $46,500. As long as we don’t break below the 200 MAs, we remain bullish in the medium term.
The important price levels during a downward breakout are:
– $48.500
– $47.100
– $45.250
We know that sooner or later there will be an outbreak. However, it remains to be seen which direction the market will take in the short term. On the lower time frames we are starting to see the first tentative signs of weakness. For now, there is no reason to drastically adjust our bullish expectations, but it is important to stay alert in the coming days!
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