The bottom’s in?
Bitcoin and the altcoin crypto markets rallied 18.59% after touching 3330, driving some to pronounce that the bottom is in. While it’s yet to be seen if this prevails as truth, there are some interesting dynamics of what happened during the run up and subsequent move.
This is the last uptrend since the previous move that occurred on from the 17–25 of January. The most recent move is a classic cup and handle, where price creates a “U” shape, followed by a price increase. in this case, Bitcoin slowly descended downwards to 3330, then rapidly moved into higher liquidity zones. The handle is created by sellers putting downward pressure on the price, demand is still increasing, creating a smaller u shaped consolidation formation.
This type of price action is commonly identified as a bullish continuation pattern. Demand, in theory, has shifted to higher levels. Let’s check out where liquidity is now.
The clear liquidity pockets are at 4000, which coincide tightly with projected support levels. But no one is committing to a move higher yet. The run up has brought in some new asks at 4000, but there is nothing above. This limits the strength of the move upwards.
If the price does break higher, what are the limits? Well, the chart above shows the previous support and resistance levels for Bitcoin since the beginning of the year. The intermediate high from the end of January is now acting as current resistance. The next level would at 4100, which is the outer limit for 1 SD Value Area and also was the previous high from Feb 10.
If we break north of 4000, our question will be “who’s selling?” I don’t think there’s a good answer.
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