Bitcoin must maintain this price level as a support for the BTC price to reach USD 17,000.
The price of Bitcoin has shown significant strength as its price recovered by more than 60% in a matter of six weeks, going from $10,000 to $16,500 and leaving many investors behind.
These investors were waiting for the CME gap to close at $9,600, which did not happen. However, can markets expect a correction to occur or are markets likely to strengthen further?
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Daily chart of the BTC/USDT pair.
The daily chart shows some crucial levels to watch. If the Bitcoin Rush app price wants to continue its upward momentum, the previous resistance zone has to change to gain support.
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A similar example is shown through the previous breakage at $13,200. This area acted as resistance before the breakage, but immediately changed to become a new support. This change in support/resistance guaranteed a greater continuation at $16,500.
The $15,500- $15,700 area implies the same critical construction as the previous $13,200 area. Maintaining the $15,500- $15,700 area means that it is likely to continue to rise, while a breakout confirms the bearish divergence that should push the price down. This downward movement may even bring BTC down to the $14,000 level.
A correction to $12,000 is still possible
Weekly chart of BTC/USDT pair.
The weekly time frame shows a precise resistance level at $12,000, which was broken six weeks ago. The next zone of massive resistance is between $15,750 and $16,500, which was reached last week.
However, is a continuation after such a massive increase likely? One argument is that there are still many unproven levels below the current spot price where liquidity can be found.
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In addition, sentiment has shifted from bearish to euphoric bullish as more institutions jump on the Bitcoin bandwagon, so a setback should come as no surprise.
As the chart shows, a correction towards $12,000, which used to be a critical level, could still occur. This level was broken after being maintained for two years. However, a new test of this area was not performed.
Investors and traders should look at this level as a possible entry of interest.
The Fear & Greed Index says that the market is overheated
The Crypto Fear & Greed index measures different variables to measure current market sentiment, which is still 90 out of 100.
This level was only reached once before. This previous level marked the peak of bullfighting in June 2019.
Of course, it is not a completely reliable indicator, and traders and investors should not blindly anticipate their strategy based on this indicator. However, it provides useful information about the current state of euphoria in the market.
Since FOMO, (fear of missing out) is becoming established, a correction would get everyone back on their feet. As stated above, such a setback would be very healthy for an overheated market.
Levels to Watch in Lower Time Periods
4-hour chart of the BTC/USDT pair.
The four-hour chart shows a clear upward trend since the $10,000 break. However, there are some crucial levels to maintain this momentum.
The red box identifies liquidity above the recent high. To continue to rise, an apparent breakout must occur in this resistance zone where the $16,500 area is immediately turned up for support. Otherwise, the breakout will most likely become a trap and only a touch of liquidity before the market reverses.
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As discussed above, the $15,600- $15,750 area has to be maintained to follow the uptrend, with the next significant area of resistance at around $17,500. If that area is not maintained as support, the next support area is between $14,800 and $15,000.
If this happens, the next support areas are likely to be $13,700-$13,900 and $12,800-$13,200.