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Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
- Bitcoin briefly held the $43k zone as support.
- The rapid decline that followed on December 11 showed that prices could gravitate towards the major liquidity pools below $40,000.
Bitcoin [BTC] posted significant gains in recent weeks, but the push past $40,000 could have been a liquidity grab. The reversal at $44.7k could highlight a local top following the BTC bulls’ inability to defend a critical demand zone.
A recent AMBCrypto report noted that the $38k region could serve as support in the coming days. Technical analyzes showed that a deeper decline could occur, but this should not worry long-term investors.
The breakout beyond the triangle pattern created euphoria
Source: BTC/USDT on TradingView
In November, BTC faced strong resistance around $38,000 but continued to form a series of higher lows. This led to the formation of an ascending triangle pattern where the trendline support (green) was invalid.
A breakout past $38,000 was followed by a rally that reached $44.7,000 just a week later on December 8.
Since then, the bullish waves have subsided. AMBCrypto’s analysis of Bitcoin’s weekly chart showed that the $41k-$43k region was significant as it had served as resistance in the first quarter of 2022.
This past week, BTC was able to climb past this resistance and retest it as support for a short time before crashing below this zone.
In doing so, it left a gap in fair value that would likely serve as resistance on the next test. At the time of writing, BTC’s market structure was bullish on the one-day chart and would remain so until the $36.7k level was broken.
The round number levels can be critical for traders and investors
Source: Hyblok
Psychological support and resistance levels in round numbers are not a new phenomenon, and this was also true for BTC. AMBCrypto’s analysis of Hyblock data highlighted the importance of the $35,000, $40,000 and $45,000 levels.
The $39.6k-$40k region has its fair share of estimated liquidation levels, and there are even more in the $44.9k-$45.7k zone.
Read Bitcoin’s [BTC] Price forecast 2023-24
Below $40,000 there were different levels of importance. The liquidation levels just above $35,000 would most likely push BTC if the King Coin dips below $39,000.
Even after such a seemingly brutal decline, Bitcoin would maintain its bullish structure on the higher timeframes. This was because the $35.3k level was key support from just a month ago.
