Bitcoin struggles for key support ahead of the weekly close

After rejecting a bounce from Bitcoin at $45,000, the recent price action turned bearish, with the key price range seen at $38,000-$39,000.

The uncertainty and low liquidity in the cryptocurrency market has created a period of volatility that correlates with the global market. Fundamentals like the Ukraine-Russia conflict are impacting both the crypto and global markets.

After the disappointing weekly candle, this week’s close is crucial as it will reveal whether the price is holding a key support level or not.

Technical Analysis

Long term

Bitcoin price has been rejected by a multi-month descending resistance line (highlighted in blue in the chart below).

On Thursday, February 17, Bitcoin fell below the key moving averages – the 50- and 20-day MAs – suggesting that the bears are not giving up and are selling on rallies to exit the market.

Furthermore, the price has not made a higher high during the intraday period, which is imperative for a reversal scenario. BTC is currently trading above the $38-39k support area along with the ascending support line (yellow), so we can expect two possible scenarios at the moment.

1. Bullish: BTC consolidates around the $40,000 region and breaks the downtrend line (in blue). This move will also help the bulls regain the 20-day and 50-day moving averages. In that case, we can expect a break above last week’s high of $45.8K.
2. Drop: BTC will break below the uptrend line (yellow) and the support zone towards lower levels. Given the value of the RSI, there is plenty of room for Bitcoin to fall and form a new local bottom (bearish trajectory).

BTC/USDT daily chart | Source: TradingView

In the short term

Bitcoin has been falling since forming a double top on the 4-hour timeframe (see below). As mentioned above, the price is still trading above the $38,000-$39.2,000 support area as well as the ascending support line (yellow line).

A likely scenario is a break below the mentioned support followed by a lower price confirming a double top. On the downside, however, Bitcoin is likely to retest the $45,000 region if current support holds.

BTC/USDT 4 hour chart | Source: TradingView

Futures Market Analysis

The sharp rise to $45,000 has restored optimism in the market. As a result, FOMO has prompted many speculators to enter heavily leveraged long positions.

After that, the price was rejected again at $45,000 and has quickly fallen 12% from the high. This has also resulted in many long orders being liquidated.

In addition to the major liquidation event, based on price action, many technical analysts have identified the $41,000 – $42,000 zone as support, meaning many stops have been placed below this level. Consequently, when BTC fell below this level, a wave of stop losses was triggered, adding to the selling pressure.

Source: CryptoQuant

Join CoinCu Telegram to keep track of news: https://t.me/coincunews

Follow CoinCu Youtube Channel | Follow CoinCu Facebook page