While Bitcoin (BTC) has experienced a similar rally since September, momentum stopped and BTC / USD failed to break through higher positions at all.
BTC prices below $ 20,000 were accompanied by a reduction in volatility and volume, making it difficult to predict the direction of the next move. Let’s take a look at the critical levels that volatility can be expected in lower time frames.
BTC price sideways movement, currently low volatility
4-hour BTC / USDT chart. Source: TradingView
Lower time frames clearly show range, which has reduced volume and volatility.
The selected selections are $ 19,400-19,600 and $ 18,400-18,600,600. The $ 19,400-19,600 series is a resistance area as the price struggles to overcome this obstacle. On the other hand, buyers enter the market in the $ 18,400-18,600 region, which is the lower end of the current range.
Oxen can claim that a stable pattern of higher peaks is going on. At the same time, bears can argue that there are regular downturns that are created at lower time frames.
Such arguments are the reason for the ambiguous attitude of traders towards the short-term price direction. However, extreme volatility can be expected after breaking through any of these levels.
Possible bearish deviation on the daily time frame
1-day BTC / USDT chart. Source: TradingView
The daily time frame shows potential bearish deviations, which will be confirmed when the bitcoin price falls below $ 18,500.
Furthermore, if such a decline occurs, the 21-day moving average (MA) will be lost as important support, which, as shown in the chart, remained intact throughout the current trend.
If the bitcoin price falls below the 21-day EMA, there will probably be a more negative development with $ 16,000 as the next logical support area. This is an important everyday area that has already been tested for support once.
In fact, this area could become very important in the coming months as BTC approaches record highs. This is because such a move would be very similar to the 2016 market cycle.
CME Gap Ready to Fill for $ 17,000
The CME chart shows a large futures gap that can still be bridged. Overall, 95% of the CME holes are closed, which increases the likelihood that the price will return to these levels in the short term.
Traders and investors should be aware that such a correction may be related to a rebound in the US Dollar Index (DXY). If that happens, altcoins are likely to show further weakness as the BTC price corrects further.