Just as Bitcoin started to show bullish potential for a possible trend reversal, the price was rejected by the important $20,000 resistance level.
BTC is in a crucial zone as the price action in the coming days could determine the short to medium term trend.
Technical Analysis
For: Edris
The daily chart
Bitcoin price recently recovered from the $18,000 support level and broke above the significant bearish trend line that started forming when BTC hit the all-time high of $69,000 in November.
However, the 50-day moving average has rejected the price and the aforementioned trend line is being tested again, this time as support.
Assuming the trend line holds, the 100-day moving average (currently around $21,000) could be the next level of dynamic resistance, with the $24,000 mark being the main static one.
No clear bullish expectations could be made before the price breaks above the mentioned resistance levels, like the market continues to decline in the daily time frame.
The 4 hour chart
In the 4-hour period, the price has yet to break out of the narrow horizontal range between $18,000 and $20,000 and has been rejected to the downside once again from the upper threshold of the range. A bearish wedge pattern (seen in the chart below) has been forming in this time frame. As of now, BTC is testing the lower boundary of the wedge.
In case of a breakdown, the market would aim for the $18,000 support level and could break below it and drop further. On the other hand, to invalidate the bearish wedge, the upper limit must be broken to the upside. In the latter (unlikely) case, the next resistance is at the $22,500 level.
The RSI indicator, which has signaled a possible bearish reversal as the price tested the $20,000 resistance with an overbought signal, is currently below 50 points, indicating that the momentum is in favor of the bears . This also supports the bearish case.
Chain analysis
Bitcoin Output Value Bands
Bitcoin is still moving in a downtrend market and has yet to show promising signs of a reversal, leading market participants to wonder where the bottom is. The chart below consists of Bitcoin’s market cap (white) and its 200-day moving average (red), high realized (green), and head delta (blue).
Historically, the 200-day MA has been a reliable support during bull markets and strong resistance during bear markets. Generally, areas above the 200-day moving average are considered bull market conditions, and vice versa.
The Realized Cap has also been a reliable support in the first phase of previous bear markets. However, it tends to break to the downside for the final capitulation and when the market goes back above, a bull (or mini-bull) market begins. Finally, Delta Cap has marked the absolute bottom of the last two bear markets with great precision.
The market is currently hovering around the realized limit located near the $20,000 mark, suggesting that the last phase of the bear market is underway. However, the price can still go down and try the Delta Cap, which is currently around $16,000, and then put it at the lowest price.
It should be mentioned that this analysis is based solely on the behavior of the market during the previous cycles and could fail this time. But, this chart gives a good perspective from a macro point of view.
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