On Monday, the short-term outlook for Bitcoin worsened after the price fell to an intraday low of $ 45,672, a far cry from the weekend’s promising rally above the $ 50,000 level.
With the year almost complete and all-time highs nearly 33% away, traders are most likely readjusting their expectations and pushing the target of $ 100,000 per BTC a little further into 2022.
Daily traders, 4-hour chart watchers, and over-leveraged longs are probably freaking out. (unless they fell short of $ 50,000 over the weekend or in weakness this morning), but let’s zoom out a bit to see where the price of Bitcoin is.
In the daily time frame, we can see that price struggles to break out of the trend of lower daily highs And, aside from the December 4 dip to $ 42,000, traders seem preoccupied with buying the most recent dips.
Tracking moving averages has always been a relatively straightforward way to trade BTC and currently the 20-day moving average (blue) is below the 50-day MA (orange). Some traders simply buy when an asset secures a few daily closes above the 20-day moving average and sell when the price falls below it because this is a sign that the short-term trend is weakening.
Following this practice, momentum traders can wait for BTC to secure a daily close above the moving average at $ 53,000 before opening new long positions. More risk-averse traders might consider waiting for the convergence between the 20- and 50-day MA as a clearer sign of a trend reversal. A quick look at the last year of price action shows that the strategy is quite effective.
Why do some traders expect more drops?
Most seasoned traders know that Bitcoin price has a tendency to make double tops, M-tops, and head and shoulders patterns after hitting new all-time highs. Lately, analysts on crypto Twitter have pointed to what they perceive as a double top, which is a clear trend reversal pattern.
Looking at the daily time frame, we can begin to see what the beginning of a head and shoulders pattern looks like. The current dips and the next consolidation could complete the right shoulder, with a neckline at $ 41,500, and a price target close to such an incredibly low number that it won’t be written here.
Traders will also notice that the neckline of such a head and shoulders pattern lines up with a wide gap in the indicator. Volume Profile Visible Range (VPVR), that shows higher buying interest right at the $ 40,000 level.
At the moment, it is too early to make too much fuss about the existence of an H&S pattern, especially since the analysis of price action cannot be determined by a single indicator, but it is still something to note.
USDBTC S/R update according to Volume Profile:
USD47k has been a good support lately but if we break it, our next strong support is at USD40k.
On the other hand, if we are able to break USD50.6k resistance the next one is all the way at USD56k.
Let’s see which set up is going to play out! pic.twitter.com/hcmvmUbVln
— whalemap (@whale_map) December 11, 2021
USDBTC S / R Update based on Volume Profile:
$ 47,000 has been a good support lately but if we break it, the next strong support is at $ 40,000.
On the other hand, if we are able to break the resistance at $ 50,600 the next one is at $ 56,000.
Let’s see which configuration ends up happening!
The data from an on-chain analysis medium, Whalemap, they also point to the $ 40,000 level as an area to watch closely. While speaking with Cointelegraph, the co-founder of Whalemap, Andy Bohutsky, He said:
“Basically, if we start to close daily candles below the noted support, we will probably go lower. The closest below us is around $ 40,000.”
Although the current Bitcoin price action does not inspire much confidence in traders who bought higher or expected the price to trade in the $ 74,000 to $ 80,000 range in December, the analyst Mohit Sorout recently noted that negative funding phases have proven to be great buying opportunities.
— Mohit Soout (@singhsoro) December 11, 2021
There are no drops on this asset.
In the daily time frame, Moving Average Convergence Divergence (MACD) and Relative Strength Index (RSI) are also oversold, and both have historically indicated phases of accumulation and good opportunities to make dollar cost averages in new long positions.
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Caution below! Analysts Target $ 40,000 Bitcoin Price Following Today’s Crash