Because the price of Bitcoin (BTC) could not break the resistance level of $ 12,000, a retracement did not come as a surprise. In recent days, BTC / USD has pulled back to $ 11,400, a correction of almost 10%.
Crypto-market daily performance snapshot. Source: Coin360
Meanwhile, gold, silver and other products are also correcting due to a slight bounce from the DXY, such as the US Dollar Currency Index.
What’s more, several heavyweights such as Chainlink (LINK) and Tezos (XTZ) have also shown substantial corrections in recent days. Could this be a moment to buy the dip, or are further versions difficult? Let’s examine the charts.
Bitcoin declined to $ 11,800 after returning in range
The price of Bitcoin could not force a breakout above the resistance level of $ 12,000, which led to a drop back in the range.
BTC / USDT 4-hour chart. Source: TradingView
As discussed in the previous article, the $ 12,000 area was crucial to hold for any further upward momentum. It failed to maintain this support, which means a pullback was likely.
Immediately after the distribution below $ 12,000, the price of Bitcoin towards the support area fell to $ 11,600. This $ 11,600 level resulted in a slight bounce to $ 11,800. However, as the chart shows, the $ 11,800 area was then confirmed as a new level of resistance.
Such a support / resistance flip generally means more disadvantage because the buyers are not strong enough to force the price above this resistance level. Given the weakness of such a move, more support levels can be tested below.
This is indeed what happened when BTC then dropped to the next support level, which is the green zone, and the last crucial hurdle before a potentially rapid drop to $ 10,000.
This key support level should hold
BTC / USDT 1-day chart. Source: TradingView
The bearish divergence calls for a potential reversal of trend. However, there is no confirmed bearish divergence unless the market starts to make new lower lows on the daily time frame.
If the recent low is found at $ 11,200-11,300, the market should remain above the green zone and recent low for a chance at more upside in the short term.
As the price of Bitcoin falls below the green zone, the next support zone is found at $ 9,600-10,000, and more pain for the bulls is on the horizon.
BTC / USD 1-day chart. Source: TradingView
There have been several examples of invalid bearish divergences found in recent years. One of them can be seen in the map (April 2019) and it looks like the current price action.
The potential bearish divergence was also spotted on the charts here. However, it was never confirmed as their last low as support. Given that the structure remained intact (higher lows, higher highs), the market climbed higher when Bitcoin rose to $ 13,000.
The general conclusion is that the current price action reminds me of much of the price action the market saw in April 2019, and history could repeat itself as long as $ 11,200-11,400 holds.
The Bullish scenario for Bitcoin
BTC / USDT Bullish scenario chart. Source: TradingView
The bullish scenario depends on the $ 11,200-11,400 support level as mentioned earlier.
As long as this area manages support and Bitcoin repays the $ 11,800 area as support instead of resistance, more upside should be expected.
Further targets for Bitcoin would then be found at $ 13,000. However, the main resistance area after $ 12,000 is $ 15,500-17,000. In other words, if $ 12K finally pays off, the market will become even more Bullish than before.
The bearish scenario for Bitcoin
BTC / USDT 12-hour bearish scenario chart. Source: TradingView
Similarly, the support level of $ 11,200-11,400 is also crucial for the bears. If this level is lost in the coming week, further downward momentum is likely, especially after the open CME Bitcoin futures gap at $ 9.7000, which is also a significant support level.
Before this can happen, however, a potential re-test of the $ 11,800-12,000 should not come as a surprise. In this regard, there are two crucial zones for the bulls and bears.
For the bulls, it should hold $ 11,200-11,400 area, after which the price of Bitcoin should pass through $ 11,800-12,000.
For the Bears, the $ 11,800-12,000 should be maintained as resistance, and the $ 11,200-11,400 area should fail as a support level.
The views expressed here and there are only those of the author and do not necessarily reflect the views of Cointelegraph. Every move of investing and trading involves risk. You have to do your own research when making a decision.
