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Bitcoin price holds key support level as focus shifts back to $12,000

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As the price of Bitcoin (BTC) showed weakness in the past week, the crucial support zone around $11,200, nevertheless, held. Several arguments were given for the volatility throughout the week with Powell’s speech at Jackson Hole and the expiration of futures and options occurring over the past few days.

But more importantly, the crucial support level at $11,200 didn’t break, which means the focus now shifts back toward the resistance level at $12,000.

Crypto market daily performance. Source: Coin360

The crucial support zone holds as the uptrend remains intact

The crucial support area has held again as the daily Bitcoin price chart shows.

BTC/USD 1-day chart. Source: TradingView

BTC/USD 1-day chart. Source: TradingView

The daily chart shows a clear resistance zone between $11,800-12,000 as well as the support zone, found between $11,100-11,300. This level has also been previously confirmed as support as well.

The $11,100-11,300 area had to hold once more as a drop below this area would almost certainly guarantee a big drop. That’s because, given the previous near-vertical rally, few support zones are found between $10,100 and $11,000.

If the price of Bitcoin drops below the green zone, a heavy drop towards the level of $10,100-10,300 wouldn’t be a surprise. What’s more, the entire upward trend is lost, as well as the range-bound structure, which would likely mean a steep drop.

But since the support level is holding again, the next step for Bitcoin would be a breakout above $11,800-12,000 to make a new higher high.

Double bottom formation signaling a short-term trend reversal

BTC/USD 2-hour chart. Source: TradingView

BTC/USD 2-hour chart. Source: TradingView

The 2-hour chart of Bitcoin shows a support zone between $11,100-11,250, which was confirmed when the price of Bitcoin didn’t really drop below this level on a higher timeframe.

The first bounce pushed the price toward $11,500, which was clearly rejected with BTC price falling back to the support zone. Once again, it held and created a double bottom pattern, signaling a potential short-term trend reversal.

However, the chart’s upper side shows that the $11,650 area is a strong zone of resistance. If it breaks, further momentum is expected toward $12,000.

The bullish scenario for Bitcoin

BTC/USDT 2-hour bullish scenario chart. Source: TradingView

BTC/USDT 2-hour bullish scenario chart. Source: TradingView

The bullish scenario is straightforward after the $11,100-11,200 level held as support through a double bottom formation.

The short-term resistance level has been hit again on Aug. 26, resulting in a slight pullback from $11,500 to $11,200. However, to have a short term trend reversal, a new higher high is needed. Such a higher high will be established if the price holds $11,300 as support and breaks $11,700.

If that occurs, the price of Bitcoin makes new higher highs and higher lows and that’s classified as an uptrend. An apparent breakthrough in this resistance zone would then put $12,000 in the crosshairs.

The bearish scenario for Bitcoin

BTC/USD 2-hour bearish scenario chart. Source: TradingView

BTC/USD 2-hour bearish scenario chart. Source: TradingView

The bearish scenario is the opposite. Since the fake breakout above $12,000, the momentum is still downward, which may see the price of Bitcoin drop further.

However, as the U.S. dollar is weakening, further downward momentum becomes increasingly unlikely for Bitcoin. If the price of BTC wants more downside, however, a rejection at the $11,600 will need to happen.

If that occurs and a new lower low (a drop below the previous low at $11,100) happens, more downside becomes likely. In that scenario, a rejection at $11,300 would confirm such a scenario.

If $11,000 is lost, potential levels of support will then be found between $10,100-10,400  and $9,600-9,800, where the CME futures gap still remains.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.





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3 reasons why Bitcoin price has not been able to rally back above $40K

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The ongoing story for the past couple of months in the cryptocurrency market has been confusion on whether Bitcoin (BTC) is destined for another leg down or is finally ready to break out toward new highs.

Bitcoin’s price history and data from previous corrections suggest that the current struggles for the top cryptocurrency could persist for a little bit longer due to the strengthening dollar, the possibility of decreasing economic stimulus and a slew of technical factors connected to Bitcoin’s price action.

A strong dollar threatens Bitcoin’s recovery

According to data from Delphi Digital, one of the biggest factors placing strain on risk assets around the globe is the strengthening U.S. dollar which appears to be attempting a trend reversal after falling below 90 in late May.

DXY 1-day chart. Source: TradingView

Rising dollar strength put a halt to the year-long uptrend in the 10-year US Treasury yield which is also a reflection that the economic expansions seen in the first half of 2021 are beginning to lose steam and there is a threat that a new wave of Covid-19 infections threatening the global economic recovery.

Fractals and the Death Cross suggest the correction is not over yet

The short-term outlook for Bitcoin remains bearish as previous instances of the “Death Cross,” which appeared on BTC’s chart in late June, have been followed by a corrective period that can last for nearly a year.

Bearish crossover of the 50 day and 200-day MA. Source: Delphi Digital

According to the analysts at Delphi Digital, the 12-month moving average is being tested as support, and a dip below this level would signal further downside for BTC price.

Bitcoin price testing the12-month moving average. Source: Delphi Digital

The 12-month moving average has been a key support level for Bitcoin historically, so how the price performs near this level could dictate whether the current uptrend remains intact.

Related: El Salvadorians take to the streets to protest Bitcoin law

Overall, caution is warranted for traders because low volumes have historically led to higher volatility when fewer open bids can lead to rapid price fluctuations.

As explained by Kevin Kelly, a certified financial analyst at Delphi Digital, “the short-term outlook turns quite a bit more bearish if and when we break those key levels” near $30,000.

Kelly said:

“I don’t necessarily think that we will see as nearly as significant of a drawdown as we did in say, post-December 2017, early 2018, and into the end of that year. But I do think, just given the structure of the market, that we could potentially be in for a bit more short-term volatility and potentially some more headwinds here, in the near term.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.