While Bitcoin (BTC) has seen a parabolic rally since September, momentum has stagnated, with BTC / USD unable to break through its all-time high.
This BTC price level below USD 20,000 was accompanied by declining volatility and volume, making it increasingly difficult to predict the direction of the next move. Let’s take a look at the crucial levels at which volatility can be expected over the lower timeframes.
Sideways BTC price action, low volatility for now
The lower timeframe graphs show an apparent range bound construction that has resulted in the volume and volatility being decreased.
The determined values are now $ 19,400 to $ 19,600 and $ 18,400 to $ 18,600. The USD 19,400 – USD 19,600 range is the resistance zone as the price is struggling to overcome this hurdle. On the downside, buyers are stepping in at the $ 18,400- $ 18,600 area, which serves as the lower end of the current range.
Bulls can argue that there is a stable structure of higher highs going on. At the same time, bears can argue that lower highs are constantly being recorded on the lower time frames.
Such arguments are the reason why traders are ambivalent about where the price is going in the short term. But what can be expected is high volatility once one of these levels is breached.
Potential bearish divergence on the daily time frame
The daily timeframe shows a possible bearish divergence, which would be confirmed once the price of Bitcoin falls below USD 18,500.
In addition, if such a drop occurs, the 21-day moving average (MA) will be lost as crucial support that has remained intact throughout the current uptrend, as the chart shows.
More downside is likely if Bitcoin’s price falls below the 21-day MA, with USD 16,000 as the next logical support zone. This is a significant daily area, which has already been tested once as a support.
In fact, this area could become very important in the coming months as BTC makes its way to its all-time high. This is because such a move is very similar to the 2016 bull market cycle.
CME hole ready to be filled for $ 17,000
The CME chart shows a big gap in the future, which is still ready to be filled. Overall, 95% of CME gaps are filled, which increases the likelihood that the price will fall back to these levels in the short term.
Traders and investors should be aware that such correction may be related to this a jump in the dollar currency index (DXY). If this happens, altcoins are likely to show even more weakness as BTC’s price corrects further.
The views and opinions expressed here are solely those of the author and do not necessarily reflect Cointelegraph’s opinion. Every investment and every trade move carries risks. You should do your own research when making a decision.