Last week, bulls needed to hold shutters above $85,000 to fend off the bears, and they managed to do just that. The Bitcoin price fell back to support last week and the bulls defended it well, pushing the price back up to close out the week at $88,656. Price on the weekly chart has rejected the lower trend line of the extended wedge pattern for several weeks now, but the trend line is so low now that price should push above it this week. Failing that this week, look for the price to take the next leg down into the low $70,000 range.
Important support and resistance levels now
The Bulls will want to keep up the pressure this week, level by level if necessary. Initial resistance is at $91,400, with the next level at $94,000. Above here we should see very strong resistance at $98,000. Then we should see a fairly strong resistance zone from $101,000 all the way up to $108,000. Close above $108,000 would start to cast serious doubt that the long-term top is in place here.
The $84,000 support level below is proving resilient and held again last week. If it is lost, the expected support levels below are unchanged. The $72,000 to $68,000 zone should be expected to support the price of a first test at least. Close below $68,000 is likely to lead to a slow grind down to the 0.618 Fibonacci retracement support at $57,000.
Outlook for this week
The bears may be getting a little confused by their recent inability to break support. This week, look for the bulls to pull back a little harder as they gain some confidence after holding support again. Market liquidity should be low during the Christmas week, so price movements may be lacking. There are some very large long-dated bitcoin options expiring on December 26, however, with a maximum pain price of $100,000, so look for the price to try to push closer to the $100,000 level this week.
Market Sentiment: Bearish – Bulls are pushing back a bit here, but they still need to prove it to the bears with positive price action.
The next few weeks
Bulls held the bears back from breaking down major support last week. If the bulls can finally manage to rule out resistance at $94,000 over the next few weeks, they may also be able to maintain upward momentum into the new year. So if we see a weekly close above $94,000, look for the price to move towards $101,000. This momentum could continue to $108,000 with a close above $100,000. However, resistance becomes extremely thick near this level, so a strong rejection near this level should be expected if we can pull it off over the coming weeks.
Terminology guide:
Bulls/Bullish: Buyers or investors expect the price to be higher.
Bearish: Sellers or investors expect the price to fall.
Support or level of support: A level where the price should hold for the asset, at least initially. The more support, the weaker it becomes and the more likely it is not to hold the price.
Resistance or resistance level: Opposite support. The level that is likely to reject the price, at least initially. The more touches at resistance, the weaker it becomes and the more likely it is not to hold the price back.
Expansion of wedge: A chart pattern consisting of an upper trendline that acts as resistance and a lower trendline that acts as support. These trend lines must diverge away from each other to validate the pattern. This pattern is a result of increasing price volatility, which typically results in higher highs and lower lows.
Fibonacci retracements and extensions: Ratio based on what is known as the golden ratio, a universal ratio regarding growth and decay cycles in nature. The golden ratio is based on the constants Phi (1.618) and phi (0.618).