- Bitcoin has started the week by battling for a key level of weekly resistance
- Maintaining this level would see it will placed to run towards $24,000, an even more crucial level
- A loss could see $19,000 come back into view
Bitcoin has started the week battling for a crucial area of support at $21,000, which has acted as resiatance dating back to June last year. Bitcoin has begun Monday morning at over $21,100, erasing all the damage done by the collapse of FTX (at least in terms of price), but a swift drop back to $20,675 has threatened that thesis. With two important areas of resistance approaching, what should we be looking out for this week?
Bitcoin Not Fading Rally…Yet
Bitcoin’s performance last week, running from $17,100 to $21,200, resulted in the biggest weekly green candle that Bitcoin has seen since February 2021. This erased all the losses experienced by the collapse of FTX and had led many to believe that a strong bear market rally is taking place.
Crucial to avoiding a drop back down to where it came from is staying above certain levels of prior resistance and turning them into support. Bitcoin has started the week well placed to do this:
As we can see, flipping this level, which has acted as resistance on multiple occasions, would leave Bitcoin in a great place to continue its rally. Were it to do so, there are a couple of higher levels where we will either see a rejection, if this is a bear market rally, or the spark for the next bull run, which is more unlikely.
Of particular importance is the next line of resistance at $24,400:
As we pointed out at the time, when Bitcoin fell through this level following the collapse of Celsius it officially marked the start of the bear market. This isn’t to say that flipping this level would be the start of a new bull market, but it would mean that Bitcoin has flipped from negative to neutral, for as long as it remains above it.
If Bitcoin were to achieve this we could see an extension of the bear market rally towards $30,000, but the chances it’s more likely that this rally will stall at either the current level or at $24,400. This could see Bitcoin return to the sub-20k level. This wouldn’t necessarily be a bad thing, as it would be typical bear market behaviour, and would lend credence to the idea that the worst if over and 2023 will be a period of accumulation ahead of a rally in 2024-25.
Downtrend Resistance Approaching
The other thing to look out for is that Bitcoin is approaching a the resistance level of a downtrend that started with the November 2021, which in itself could be enough to end this rally:
It may be an unfair comparison, seeing as there will likely be no ‘China adopting blockchain’ narrative to drive it, but here’s what happened the last time Bitcoin broke its downtrend from the prior high:
Well, we can dream can’t we?
