Bitcoin price holds key support level as focus shifts back to $12,000
As the price of Bitcoin (BTC) showed weakness in the past week, the crucial support zone around $11,200, nevertheless, held. Several arguments were given for the volatility throughout the week with Powell’s speech at Jackson Hole and the expiration of futures and options occurring over the past few days.
But more importantly, the crucial support level at $11,200 didn’t break, which means the focus now shifts back toward the resistance level at $12,000.
Crypto market daily performance. Source: Coin360
The crucial support zone holds as the uptrend remains intact
The crucial support area has held again as the daily Bitcoin price chart shows.
BTC/USD 1-day chart. Source: TradingView
The daily chart shows a clear resistance zone between $11,800-12,000 as well as the support zone, found between $11,100-11,300. This level has also been previously confirmed as support as well.
The $11,100-11,300 area had to hold once more as a drop below this area would almost certainly guarantee a big drop. That’s because, given the previous near-vertical rally, few support zones are found between $10,100 and $11,000.
If the price of Bitcoin drops below the green zone, a heavy drop towards the level of $10,100-10,300 wouldn’t be a surprise. What’s more, the entire upward trend is lost, as well as the range-bound structure, which would likely mean a steep drop.
But since the support level is holding again, the next step for Bitcoin would be a breakout above $11,800-12,000 to make a new higher high.
Double bottom formation signaling a short-term trend reversal
BTC/USD 2-hour chart. Source: TradingView
The 2-hour chart of Bitcoin shows a support zone between $11,100-11,250, which was confirmed when the price of Bitcoin didn’t really drop below this level on a higher timeframe.
The first bounce pushed the price toward $11,500, which was clearly rejected with BTC price falling back to the support zone. Once again, it held and created a double bottom pattern, signaling a potential short-term trend reversal.
However, the chart’s upper side shows that the $11,650 area is a strong zone of resistance. If it breaks, further momentum is expected toward $12,000.
The bullish scenario for Bitcoin
BTC/USDT 2-hour bullish scenario chart. Source: TradingView
The bullish scenario is straightforward after the $11,100-11,200 level held as support through a double bottom formation.
The short-term resistance level has been hit again on Aug. 26, resulting in a slight pullback from $11,500 to $11,200. However, to have a short term trend reversal, a new higher high is needed. Such a higher high will be established if the price holds $11,300 as support and breaks $11,700.
If that occurs, the price of Bitcoin makes new higher highs and higher lows and that’s classified as an uptrend. An apparent breakthrough in this resistance zone would then put $12,000 in the crosshairs.
The bearish scenario for Bitcoin
BTC/USD 2-hour bearish scenario chart. Source: TradingView
The bearish scenario is the opposite. Since the fake breakout above $12,000, the momentum is still downward, which may see the price of Bitcoin drop further.
However, as the U.S. dollar is weakening, further downward momentum becomes increasingly unlikely for Bitcoin. If the price of BTC wants more downside, however, a rejection at the $11,600 will need to happen.
If that occurs and a new lower low (a drop below the previous low at $11,100) happens, more downside becomes likely. In that scenario, a rejection at $11,300 would confirm such a scenario.
If $11,000 is lost, potential levels of support will then be found between $10,100-10,400 and $9,600-9,800, where the CME futures gap still remains.
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This post first appeared here: https://cointelegraph.com/news/bitcoin-price-holds-key-support-level-as-focus-shifts-back-to-12-000