Bitcoin has been pulling back from its recent highs, with bears taking control after prices broke below a key rising trendline support.
Check out these inflection points to watch on the 4-hour time frame:
Bitcoin (BTC/USD) 4-hour Chart by TradingView
BTC/USD has shown weakness in the past few trading days after breaking below its rising lows pattern that had been supporting price action since November. This technical breakdown correlates with last week’s surprise shift in FOMC interest rate expectations and likely on traders reassessing their positions heading into the year-end period.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on bitcoin and the U.S. dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
The current market area around $93,300 is a strong area of interest to watch for both the bulls and the bears as it has acted as both support and resistance since November. If bullish reversal patterns reform here once again, technical traders on both the short and longer term time frames may jump back in the long side. And with a daily ATR of around $4,000, a retest of a strong technical confluence could be in the cards.
We’re talking about the 100 SMA and 200 SMA convergence zone just under the $100,000 major psychological level, which is now likely to act as a potential resistance area from a purely technical perspective. This level coincides with the weekly pivot point, another potential draw for technical players.
Now, if we start to see sustained trade below the $93,300 area, selling momentum may continue, and based on the daily ATR, the next area with likely strong technical interest is the key support zone between the 50% – 61.8% Fibonacci levels, where the S2 pivot point and the major psychological level of $85,000 also comes into play.
There’s a lot of technical arguments to watch there, and if bulls manage to defend the $85,000 psychological support area with conviction, we could see a bounce back towards the moving average resistance zone as this will likely attract longer-term mega Bitcoin bulls, again all depending on the broader market environment and likely on what the U.S. dollar is doing.
Whichever way you decide to trade this setup, make sure you practice proper risk management and keep an eye out for any shifts in broader crypto market sentiment that could impact price action!