- Bitcoin looks to have re-established itself in a range that we first saw last month
- $53,500 acted as support, suggesting that a period of reduced volatility is on the cards
- Bitcoin is also close to a nine-year resistance line which will impact its short term performance
Bitcoin looks to have established itself in a $4,000 channel that it only recently left, in a sign that a period of ranging is possible. Since it was unable to move past the $62,000 level last week Bitcoin has dropped $9,000 but bounced at around $53,500:
This price action has left Bitcoin in a channel that it first experienced toward the end of last month, although this time around the $53,500-$54,000 range has acted as strong support. The prior price action around these levels affords us a pretty clear idea of what to expect next – a break of the top of the channel and we can expect to retest previous highs, while a drop below the lower range and we can look toward the same levels of support as previously.
Where Next for Bitcoin?
As for the likely direction there is no clear indicator at present. Unless some fundamental news comes along that gives us a boost it’s likely that this ranging will continue, which is good news for alts, while Bitcoin gathers itself for the next likely leg up. However, with Bitcoin dominance rejecting at a crucial level earlier in the week, this might have been delayed.
Another reason why we need to be cautious about Bitcoin at these levels is that it is getting closer to a resistance curve dating to 2011:
This curve has been plotted by all the previous market tops, and while this is not an absolute statement of where the Bitcoin market will top out, it is nevertheless one of those indicators that will have a sentimental impact on the Bitcoin price. We can see from a lower timeframe view just how close we are to it, with one more surge likely to get us there:
We can expect heavy resistance around this resistance, and potentially some large drops if we reject from it, but if we manage to break it and use it as support then we can truly assume that a new paradigm has begun for Bitcoin.
