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 $ 100,000 BTC target 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 on weakness this morning), but let's zoom back a bit. to see where the price of Bitcoin is.
On the daily time frame, we can see the price struggling to break out of the trend of lower daily highs and aside from the Dec 4 dip to $ 42,000, traders seem preoccupied with buying the most recent dips.
Tracking moving averages has always been a relatively simple 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 20-MA 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 $ 53,000 moving average before opening new long positions. The most risk-averse traders might consider waiting for the convergence between the 20-50-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 Some Traders Expect More Disadvantages
Most seasoned traders know that Bitcoin price tends to make double-top, M-tops, and head-and-shoulders patterns after hitting new all-time highs. Lately, crypto analysts Twitter have pointed to what they perceive as a double top, which is a clear trend reversal pattern.
By 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 eventually complete the right shoulder, with a neckline of $ 41,500 and a price target close to such an incredibly low number that it will not be written here.
Traders will also notice that the neckline of said head and shoulders pattern lines up with a wide gap in the Volume Profile Visible Range Indicator (VPVR), showing 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 worth noting.
$ BTC S / R update based on volume profile:
$ 47k has been a good support lately, but if we break it, our next strong support is $ 40k.
On the other hand, if we are able to break the $ 50.6k resistance, the next one is $ 56k.
Let's see what configuration is going to be developed! pic.twitter.com/hcmvmUbVln- whale map (@ whale_map) December 11, 2021
Data from chain analysis outlet Whalemap also points to the $ 40,000 level as an area to watch closely. While speaking to Cointelegraph, Whalemap analysts said:
“Basically, if we start to close daily candles below the support described above, we will probably go lower. The closest below us is around $ 40,000. "
While Bitcoin's current price action does little to inspire confidence in traders who bought a higher or expected price to trade in the $ 74,000 to $ 80,000 range in December, analyst Mohit Sorout recently noted that the funding phases negative have proven to be great buying opportunities.
There are no downsides to this asset$ btc pic.twitter.com/Vr7mPFOvxU
- Mohit Soout (@singhsoro) December 11, 2021
On the daily time frame, Moving Average Convergence Divergence (MACD) and Relative Strength Index (RSI) are also oversold, both of which have historically pointed to accumulation phases and good opportunities for the dollar cost average in new long positions.
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 business move involves risk, you should do your own research when making a decision.
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