Bitcoin: Navigating the Bullish Battle Above $100K

As a seasoned trader with over a decade of experience navigating the cryptocurrency market’s rollercoaster rides, I must say that this Saturday night is shaping up to be another complicated one. The bullish 50 SMA on the daily chart and the horizontal support at $99,000 are keeping Bitcoin in a precarious yet bullish posture. However, the rising wedge needs to be invalidated with a strong close above $103,000 to ensure that the king truly stays strong on this timeframe.

Over the past few days, the anticipated relaxation that retail traders expected hasn’t materialized, instead leading to further setbacks and the appearance of pessimistic trends. The once promising “Santa rally” now appears elusive as broader economic concerns cast a heavy shadow over the market.

Today, several significant cryptocurrencies are experiencing underperformance. Notable declines can be seen in SUI (-6.5%), which peaked at its record high of $4.89 last Friday, as well as PEPE, BONK, and Polkadot, all losing approximately 6%. Furthermore, Cardano, Fantom, and Hedera have each dropped more than 5%, indicating a widespread pullback within the altcoin market.

Currently, the total value of all cryptocurrencies is approximately $3.6 trillion, representing a 1.2% decrease over the past day. Notably, this decline is common on Saturdays as trading volume has dropped significantly by 23.93%. Bitcoin’s dominance has seen a slight increase to 55.74%, indicating that investors are favoring safer investments amid increasing uncertainties. On CoinMarketCap’s Altcoin Season Index, it appears that Bitcoin continues to hold sway over the market, making it difficult for altcoins to gain momentum.

In challenging times such as these, it can be hard not to feel discouraged. However, experienced investors have learned from past experiences. If you’ve navigated a few of these turbulent four-year cycles, the approach remains consistent: maintain a broad perspective, tune out the commotion, and get ready for strategic buying chances that will arise.

Let’s break down the market leader, the king of cryptocurrencies: Bitcoin ($BTC):

The Rectangle Pattern and $74K Support

Firstly, let’s tackle an obvious point: the rectangular pattern that emerged in February, following the approval of the spot ETF in January 2024. This pattern subsequently moved upward after the election results, precisely reaching its predicted peak of $99,000. Now, this peak price at around $74,000 is serving a crucial function as support, a line that many Bitcoin investors see as significant.

As a researcher, I’m reinforcing the stability of this rectangle by pointing out the 200-day moving average (MA), represented by the green line, which is presently at $69,000 and exhibiting growing bullish momentum. Over time, this 200-day MA has proven to be a robust dynamic support in bull markets. However, Bitcoin’s recent divergence from this level has sparked worries about a possible mean-reverting situation, where the price might rebound to align with this long-term trend. Therefore, it’s crucial to closely monitor the 1-day chart for potential changes.

If the price of $74,000 were to fall significantly and confirm that drop, it could lead to a series of sell-offs, potentially pushing the price down towards the lower boundary of the recent trading range, around $49,000-$50,000. It’s important to note that such a correction isn’t guaranteed (or perhaps not until the next market downturn), but it’s worth considering that a drop to $74,000 would equate to approximately a 27-28% decrease from the All-Time High (ATH). While this might sound severe, it would be within the range of typical corrections during a Bitcoin bull market.

The $107K Bull Flag: Still in Play?

As a crypto investor, I’ve been closely watching the price movements of Bitcoin, and one thing that stands out is the promising bullish macro formation this year. The catalyst for this trend was the SEC’s historic approval of a Bitcoin ETF in January, which marked the beginning of this bullish cycle.

It’s intriguing to note that on the 4-hour chart, another bullish pennant pattern (represented in purple) corresponds with the predicted price of $107,500 for this flag’s target. The convergence of two separate patterns at the same price point provides additional credibility to this target, making it a significant potential profit zone.

The arrangement of these patterns indicates that Bitcoin could have a more optimistic long-term outlook, as long as temporary obstacles don’t disrupt its progress.

The Rising Wedge and Current Challenges

For now, Bitcoin’s short-term trend appears to be confined within an ascending triangle (a rising wedge) on the 4-hour chart, a pattern that traditionally indicates bearish tendencies according to technical analysis. Interestingly, this pattern’s base was established by two substantial December price plummets, which now serve as vital points to monitor closely due to their historical significance.

currently maintaining its position at around $101,000. Although Bitcoin momentarily surpassed the six-digit mark, the surge was not supported by sufficient volume and momentum, making it susceptible to a reversal. It’s possible that by the time you read this, the price above $100,000 might have already dropped.

Should the falling pattern indicated by the rising wedge give way, it’s nearly ideal that the price will reach a potential target close to the 0.382 Fibonacci level, which is approximately $86,700.

If the price falls close to $90,000, it could break the bullish pennant formation, making the bullish outlook less convincing.

Momentum Check: RSI Signals Mixed but Worrisome

The RSI value for day-to-day changes remains predominantly optimistic, currently hovering slightly above 64 following a period of overbought conditions in November. This stable level is underpinned by an uptrend in the RSI line, which has been climbing since August 2024 (indicated in the chart as the red rising line). As the RSI maintains this trendline and continues its steady upward trajectory, Bitcoin is likely to continue experiencing growth.

When we scrutinize the 4-hour Relative Strength Index (RSI), it shows potential warning signs of fatigue. The RSI peaked at 76 during Bitcoin’s December 5 All-Time High (ATH) of $103,700, which is a lower peak compared to earlier overbought readings. This is an instance of bearish divergence, where the price reaches a higher high but the RSI achieves a lower high. In simpler terms, this means that while the price was on the rise, the underlying strength or momentum was diminishing—a common warning sign often seen before corrections or consolidations.

Amidst the conflicting feelings, the volume when Bitcoin surpassed $100,000 was relatively low, which is often a warning sign about the longevity of bullish price trends.

At present, Bitcoin is seen as optimistic since it’s holding above its 50-day Simple Moving Average (represented by the yellow line) on the daily chart, hovering around $99,000. This level also coincides with a significant horizontal support zone. For buyers to firmly reclaim dominance, they need to break the current pattern (wedged shape) by closing strongly above $103,000, ideally accompanied by a surge in trading volume.

Key Ideas to Trade This

Crossing Above $103K: A robust daily closing point beyond $103,000 accompanied by a noticeable increase in trading volume could disprove the wedge formation and indicate an upswing toward $107K. Keep an eye on subsequent developments within the 4-hour timeframe to verify the breakout.

Trading the Wedge:

Instead of using the upper line of a forming wedge, consider waiting for a price reversal at the lower trendline as a potential entry point for long trades. Confirm this decision by looking out for bullish candle formations such as hammers or observing the RSI recover from oversold levels.

Do Nothing:

It might be prudent to hold off and observe, given that the Federal Open Market Committee (FOMC) meeting is approaching on Wednesday. Therefore, it could be beneficial to explore potential opportunities for investment in the time leading up to this event, with a likely dip expected between Sunday and Monday night as a possible entry point.

Summary: A Complicated Saturday Night

Currently, as of Saturday evening, Bitcoin maintains a precarious position. It’s trading above the short-term bullish Simple Moving Average (represented by the yellow line on the daily chart) and is holding the $99,000 horizontal support, which keeps Bitcoin looking bullish. However, to firmly hold its ground in this timeframe, it’s crucial that the rising wedge pattern be broken with a robust close above $103,000, ideally accompanied by a substantial increase in trading volume.

As a researcher, I’m observing an interesting development: The Fear & Greed Index is back in the Extreme Greed zone (80), after a momentary retreat during some recent market corrections.

As a researcher, I’ve noticed an issue: Liquidation events didn’t effectively readjust market sentiment, instead leaving it excessively optimistic and insufficiently cautious. This situation, already precarious, becomes even more risky, as excessive greed can frequently presage significant corrections.

At present, the Altcoin Season Index stands at 60, indicating a period of uncertainty. Even though the index remains above neutral levels, the significant decline from last week’s 83 suggests that the altcoin season may be on hold – not necessarily canceled, but definitely losing momentum. As such, it is likely that altcoins will face challenges until Bitcoin (and Ether) either solidifies its position or resolves its current trends.

As a crypto investor, I must admit that this article might seem outdated as early as Monday if Bitcoin shows a clear bullish candle. To be honest, December, with its Moonvember’s impressive rally, has been tougher than anticipated so far. The cryptocurrency market is undeniably more intricate now compared to last month, or even just a few days ago.

2024-12-15 04:24