Bitcoin (BTC) seems to have found a new resistance level at $42,541.68 after a short-lived bullish trend.
Following the price rebound, BTC is now trying to find a new support level. But at what price level?
Two weeks down the line, everybody seemed sceptical about a bullish Bitcoin price. The market was in a funnel and the majority were expecting the digital coin to slip further to about $20,000.
However that suddenly changed and over the last 10 days, Bitcoin saw an impressive 44% upsurge taking it above the $40K level after staying at $38K for quite some time. But the hype was short-lived as the coin took a dip almost immediately and went below $40k once again to its previous price of $38K.
Now the question at the back of most investors and traders is: was the breakout a confirmation that the bearish trend is over or was it just a mock to prepare traders for a gruelling downslide?
Let us look at some technical analysis:
The 42K resistance scuttled Bitcoin’s bullish rally
The bullish rally that had started towards the end of last week stooped just above $42,000 with the market pulling back below $40K in less than two days.
At the moment, the market isn’t sure of its next move.
However, the weekly chart shows that there could be a resistance zone between $20,600 and $37,700.
Bitcoin (BTC) prices have however already tested the resistance level several times and even recently broken out past the $40K level.
It is still not very clear whether the BTC price will slide back to this resistance zone ($20k – $38k) or it shall decide to close that chapter and move on to a higher support zone above the $38K level.
On-chain analysis shows that there has been heavy selling by short-term Bitcoin (BTC) holders following the retracement from $42K while the long-term holders are still optimistic that the prices will eventually get back above $40K and even test its previous highs above $60K.
The Fibonacci retracement on the weekly chart places the next retracement level to watch at slightly above $37,400, which coincides with the R1 level indicated by the support and resistance indicator.
If BTC bounces back to this level ($37K), then it may have found a new support level, which could mean it will have to find a higher support level that could be above $40K.
The key levels to watch
Going by the above market analysis, traders should watch the 37K level which coincides with the next Fibonacci retracement level and the resistance (R1) of the pivot point indicator.
If the price goes below the $37K level, traders should watch the final Fibonacci retracement level just above 29K, which if broken the market could be headed down to the Pivot point at $20K.