Bitcoin price suddenly regains bullish momentum with $20K in sight
Bitcoin (BTC) remains in the spotlight after MassMutual became the latest company to allocate $100 million of its portfolio into Bitcoin. This is adding to the impressive buy pressure at the moment, renewing hopes of Bitcoin breaking $20,000 in December.
While a correction occurred in the past week, Bitcoin’s price bounced above the crucial level at $18,600 and is now targeting new all-time highs. However, since the breakout occurred during the weekend, one concern for the bulls is the relatively low volume of the bounce during the weekend.
Bitcoin breaks above $18,600, back into the range
The 4-hour chart tells everything about the recent move of Bitcoin. Initially, Bitcoin’s price fell through the crucial support zone at $18,500 and dropped towards the next support at $17,600.
This support zone held as support, resulting in a bullish divergence. Similarly, the bears couldn’t force a breakdown below $17,600 with buyers stepping in at this level.
From there, the crucial resistance was $18,500, which was quickly broken in several hours. This move also saw a substantial rally toward the all-time high resistance zone at $19,500.
Will Bitcoin copy previous movements again?
This outlook gives an insight into the buildup of ranges after an impulse move to the upside. Bitcoin’s price has seen several during the year. The first impulse move occurred before the halving, the second one in August, and the last one over the past few months.
However, every time such an impulse move occurs, a range is constructed as markets need to generate strength to continue the momentum. Nothing goes up in a straight line, and tests of previous resistance levels have to occur to continue the momentum.
A rising wedge was established with a fake breakout above its recent high in every of the previous range constructions. The likelihood of this happening again is increasing given the current low-volume weekend move.
From that perspective, a move towards $21,000 is back on the table, which should immediately see the $19,500 area flip for support. If that doesn’t happen, history will repeat itself, and Bitcoin most likely falls back into the range. Therefore, the levels to watch are $14,000 and $16,000 for higher timeframe support zones.
CME futures closed at $18,115 on Friday
The gaps in the CME futures chart have been the focus of many discussions and remain an important variable to keep an eye on.
A new CME gap will be created as the recent closing price is $18,115. As such, this futures gap will likely become a significant point for entry or exit, which is why such gaps frequently become a self-fulfilling prophecy and get filled.
There are two open CME gaps from recent price action. The first one didn’t fill completely as there’s still open air at $17,015. The second one at $18,115 will be created due to the weekends’ bullish price action.
Crucial levels to watch for volatility
The crucial levels are easy to spot, as the chart shows. The resistance zone to break is $19,400-19,600. This is the all-time high resistance zone and the final one before BTC/USD goes into price discovery.
However, a breakout doesn’t guarantee continuation. The resistance area must first flip for support for the rally to continue. Otherwise, a fakeout becomes the likely scenario as described in this article.
On the downside, the $18,500-18,600 area has to hold to set the stage for testing new all-time highs. If that fails, the possible retests of $16,00 and even $14,000 remain on the table.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
