Bitcoin remaining relatively stable despite a cryptocurrency exchange
getting hacked over the weekend is a positive sign for the market’s
maturity.
Volatility was expected throughout the week regarding the
expiration of a significant amount of futures. However, this didn’t
really happen while the macro-economic environment also remains uncertain.
A hack of a major cryptocurrency exchange
on Sep. 26 didn’t influence the price at all, which is a positive
signal for the markets and a positive signal for the market’s maturity.
However, is this boring price action going to continue for Bitcoin (BTC)? Let’s take a look at the charts.
Bitcoin still stuck in a range on the daily timeframe
BTC/USD 1-day chart. Source: TradingView
Sometimes
charting can be relatively simple, and this is one of those cases. The
price of Bitcoin fell below $11,100-11,300 earlier this month,
establishing new support at $10,000.
The level that has been lost, the $11,100-11,300 zone, is now confirmed resistance as well as the new upper resistance area.
On the downside, a potential drop towards $9,600 wouldn’t be unexpected as the level around $9,600 is still untested with the CME futures gap continuing to linger.
BTC/USDT 4-hour chart. Source: TradingView
The
4-hour chart shows a clear bullish divergence implying a short-term
trend reversal. Combined with the overly bearish sentiment across social
media, the market was ready for such a relief bounce.
The
same bullish divergence was seen with other cryptocurrencies, so the
relief bounce was felt across the majority of the market.
However, as stated in the previous analysis,
the $10,800 barrier is a crucial hurdle to take. If it can be overcome
as a resistance level, the $11,100-11,300 area comes back into play.
This
$11,100-11,300 area is the final step before the continuation of the
bull market. If Bitcoin’s price can break through that resistance zone, a
test of the recent highs at $12,000-12,400 is on the table.
Total market capitalization looking for support
Total market capitalization cryptocurrency 1-week chart. Source: TradingView
The
1-week chart of the total market capitalization of cryptocurrencies is
showing a clear pattern. A fresh higher high was printed in the previous
months, marking the potential start of a new uptrend.
After
a higher high, a new higher low has to be made in which a range-bound
structure can be defined. The best area for such a higher low is likely
the previous resistance zone, marked green in the chart, or at $250-275
billion, would be a beautiful support/resistance flip warranting
continuation.
If that area holds, it also shows why the
beginning of a new cycle is relatively dull. During the start of a new
market cycle, levels are flipped as support/resistance, after which
months of range-bound periods can occur. An example is shown with the
price movements of Bitcoin in 2016 (which was also a halving year).
BTC/USD 1-week chart of 2016. Source: TradingView
During
these periods, the price of Bitcoin stabilized in an accumulation range
throughout 2015. After this accumulation range, Bitcoin’s price broke
out and rallied towards the next resistance zone.
This
rally ended up with a 6-month long sideways range. A renewed breakout
occurred, and another 6-month sideways range started. Hence, the current
market sentiment can be compared with that period.
But
the real excitement will come when the total market capitalization and
Bitcoin break into price discovery (over $20,000) as then potential
parabolic runs can come back into play.
The bullish scenario for Bitcoin
BTC/USD 4-hour chart bullish scenario. Source: TradingView
It
should be noted that these scenarios are based on lower
timeframes (4-hour) and, therefore, should be considered as a short-term
outlook.
As the price of Bitcoin is stuck in a range
and currently facing resistance, it’s more likely to anticipate a
breakdown to the $10,400 area. The $10,400 area is the vital area to
hold for any bullish continuation.
If Bitcoin’s price
holds here, a potential higher low is defined, which would fuel further
upward momentum. As the chart shows, the crucial breaker is the $10,800
area. If that area breaks, the next hurdle becomes $11,150-11,300.
It would be unexpected to see a breakout above that area to occur, but that would warrant an even stronger bullish case.
The bearish scenario for Bitcoin
BTC/USD 4-hour chart bearish scenario. Source: TradingView
The
same levels surround the bearish scenario. A failure to break the
$10,800 area would present a potential test of the $10,400 area.
As
discussed in the previous part, a potential higher low can be made,
therefore, reintroduce bullish perspectives. However, if $10,550 fails
to break, further downward momentum should be expected, including the
still-open CME gap. Who wouldn’t be happier with the closing of that CME
gap after these past few months?
source link : https://cointelegraph.com/news/what-price-must-bitcoin-reclaim-for-a-renewed-bull-market-in-october
