KEY INSIGHTS
- Reattempt at $104,012.4: While the RSI remains in a healthy range, it is hovering near overbought levels, suggesting a high likelihood of Bitcoin re-testing $104,012.4.
- Targeting $107,000: If Bitcoin breaks through $104,012.4, Fibonacci expansion suggests that the next target is around $107,000.
- Risk of Correction: Despite the current upward trend, the momentum is visibly weakening, increasing the likelihood of a corrective phase.
- Support Levels to Watch: During a potential correction, $85,153 and $73,563.5 are likely to act as critical support levels.
- Importance of 200EMA on the 4-Hour Chart: Historical data suggests that the 200EMA often serves as a key pivot for rebounds, making its role in the current trend highly noteworthy.
- Application of Horizontal Line Theory: On the 1-hour chart, selling strategies around $104,012.4 (all-time high) and $101,906.8 (recent high) could be effective.
Introduction
Reflections on the Previous Analysis
In our last analysis (2 Dec 2024), Bitcoin continued its strong bullish momentum, breaking past the $99,336.1 resistance level and reaching a new all-time high of $104,012.4. This move was driven by robust market sentiment, fueled by institutional participation and favorable macroeconomic factors. At the same time, we observed that the RSI, which had retreated to a neutral range, signaled the possibility of a consolidation or correction phase despite the ongoing uptrend.
Last week’s analysis emphasized the importance of the 200-day moving average on the 4-hour chart, which acted as a key support level near $95,000. Bitcoin’s ability to hold this level was crucial in maintaining short-term price stability. However, signs of weakening momentum were also noted, underscoring the risks of a correction and highlighting the need to monitor support levels at $85,153.
The interplay of investor sentiment around key price levels has emerged as a significant driver of market dynamics. Current buying and selling behaviors at these levels are likely to dictate the next trend. With the possibility of a short-term correction on the horizon, various scenarios are being considered. This week, as Bitcoin approaches critical levels, the focus shifts to whether it can sustain its bullish momentum to break through $104,012.4 and target $107,000 or if the market is preparing for a broader correction.
Price Review & Summary of Last Week’s Analysis
Bitcoin initially traded within a range of $85,153 (support) to $99,336.1 (resistance) but broke through the resistance level to set a new high of $104,012.4. This breakout was accompanied by a rebound near the 200-day moving average on the 4-hour chart, providing short-term price stability and serving as a critical indicator of market sentiment.
These movements highlight the importance of observing price action around major support and resistance levels. This week, the focus shifts to analyzing whether Bitcoin can sustain its momentum or if a correction is imminent, alongside key scenarios for trend formation and market behavior.
Market Analysis & Price Action
Significant Price Movement Analysis
Bitcoin is currently trading near the high of $104,012.4, with the RSI remaining in a healthy range. This suggests a likely reattempt to breach $104,012.4. Breaking this level could push Bitcoin toward the $107,000 target, as indicated by Fibonacci expansion. However, the weakening momentum reduces the likelihood of a sustained breakout.
If a slowdown is confirmed at higher price levels, there is a high likelihood of a sharp correction. In the event of a decline, the support lines at $85,153 and $73,563.5 will become key targets. However, if these levels are breached, the risk of a more significant drop increases considerably.
Detailed Analysis
Daily Chart: Overall Movements
- First Support Level:
The $85,153 level has been a critical support line since November 18 and is likely to act as a cushion during corrective phases. - Next Support Level:
If Bitcoin falls below $85,153, the next support level would come into focus. While a rebound due to role reversal is possible, it may not hold in the face of a strong downward trend.
4-Hour Chart: Key Price Levels
Significance of the 200EMA:
- On the 4-hour chart, the 200EMA has historically served as a pivot for rebounds.
- Price movements near the 200EMA (approximately $95,000) should be closely observed for signs of support or potential breakdown.
1-Hour Chart: Key Price Levels
Key Resistance Levels:
Price movements are currently limited, with
- $104,012.4 (all-time high)
- $101,906.8 (recent high)
acting as significant resistance levels. A failure to break above these levels is likely to increase selling pressure, pushing Bitcoin into a corrective phase.
Horizontal Line Theory:
- Monitoring these resistance levels can provide crucial signals for determining whether the trend will continue or reverse.
Conclusion
At present, Bitcoin is expected to reattempt the $104,012.4 level. However, the risk of correction remains significant if it fails to break above this resistance. The weakening momentum is reflected in both RSI and price action, signaling the potential onset of a corrective phase.
Key support levels at $85,153 and $73,563.5 must hold to prevent a steep decline. Additionally, the 200EMA on the 4-hour chart and resistance levels on the 1-hour chart should be carefully monitored for clues about the market’s next move.
This week’s analysis underscores the importance of staying vigilant as Bitcoin navigates this critical phase. Traders should focus on building strategies that accommodate both potential breakout opportunities and the risks of a deeper correction. As Bitcoin continues to oscillate between bullish momentum and the possibility of a retracement, the coming days will be decisive in shaping the cryptocurrency’s trajectory for the rest of the year.
Whether Bitcoin achieves new highs or experiences a temporary pullback, adaptability and a clear understanding of the market’s critical levels will remain key to navigating this complex landscape.
Beginner Friendly Glossary
- Fibonacci Extensions
Fibonacci extensions are a tool that traders can use to establish profit targets or estimate how far a price may travel after a pullback is finished. Extension levels are also possible areas where the price may reverse.
Learn more here - Moving Averages (200-day Moving Average)
The 200 Day Moving Average is a long term moving average that helps determine the overall health of a stock. A 200 Day moving average is calculated by taking the closing prices for the last 200 days of any security, summing them together and dividing by 200.
Learn more here - Price Action
Price action refers to the pattern or character of how the price of a security behaves, typically in the short run. Price action can be analyzed when it is plotted graphically over time, often in the form of a line chart or candlestick chart.
Learn more here - Horizontal Line Theory
Horizontal lines are commonly used in technical analysis to highlight areas of support, where the price stopped falling and then bounced on prior occasions, or resistance, which is where the price stopped rising and then proceeded to fall on prior occasions.
Learn more here - Correction Phase
A correction is a decline of 10% or greater in the price of a security, asset, or a financial market. Corrections can last anywhere from days to months, or even longer. While damaging in the short term, a correction can be positive, adjusting overvalued asset prices and providing buying opportunities.
Learn more here
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