The fact that Bitcoin (BTC) price was unable to break through the resistance level at $12,000 meant a retracement was imminent.
However, the fast pace of the current retrace was not expected by the markets and has surprised a lot of traders. The crucial support zone of $11,100 failed to provide support and led to the current tumble towards the $10,500 region.
Crypto market daily performance snapshot. Source: Coin360
Bitcoin price drops alongside weakness in equity markets
Not only has the price of Bitcoin been showing weakness today, but the U.S. equity markets are also experiencing a massive sell-off as well.
BTC/USDT 1-day chart. Source: TradingView
The Bitcoin daily chart is showing a clear rejection of the $12,000 zone, after which a sharp drop occurred. Such a drop wasn’t unexpected, given the rejection of $12,000. However, a closer look will determine whether the fast-paced drop towards the $10,500 was a likely outcome.
BTC/USDT 3-hour chart. Source: TradingView
The lower time frames are showing a clear break of the $11,100-$11,300 support area and the blue boxes show that the support has been tested several times.
The more a support level is tested, the weaker it becomes and after the rejection of $11,400 on Sep. 2, a renewed test of the support zone at $11,100 could warrant support.
This failure caused the prices to drop towards the lower support zones, which can be found at $10,400-10,600. Given the significance of the drop and the fast pace, a short term relief bounce is on the tables.
The bullish scenario for Bitcoin
BTC/USDT 4-hour bullish scenario chart. Source: TradingView
Unfortunately, there’s not much bullishness to see on the chart at this point. First of all, to consider anything bullish, support has to be established between $10,400-$10,600.
If that area can establish some support, a short term bounce towards the $11,200-$11,300 area could occur. Immediately, that’s also the crucial point for any further reflection of bullishness.
It’s unlikely to expect an apparent breakthrough in this resistance zone in one go, as the price has been holding support at this level for weeks.
Therefore, a rejection at $11,200-$11,300 and a retest of the $10,400-$10,600 are to be expected. In this case, it’s important to consider what are the crucial pivots points.
After these double bottom tests, an eventual breakthrough of $11,200-$11,300 would warrant the possibilities of renewed tests of the $12,000 level.
Losing the support at $10,400-$10,600 would invalidate the bullish scenario and warrant further downwards momentum.
The bearish scenario for Bitcoin
BTC/USDT 4-hour bearish scenario chart. Source: TradingView
The bearish scenario is relatively the same. However, the clear difference is a failure of the support to sustain support.
If the price of Bitcoin can’t reach the $11,200-$11,300 area and rejects at $10,900 already, further downwards momentum is imminent.
In that case, it’s very likely to expect a breakdown of the $10,400-$10,600 support area. If the support area breaks down, a further correction towards $9,600-$9,900 is on the tables.
The $9,600-$9,900 is a massive pivot, as there’s also an open CME gap in that region. As 90% of the CME gaps close, it’s not unlikely to expect a close of this CME gap shortly.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Author: Cointelegraph By Michaël van de Poppe