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In the previous weeks, altcoins have gained momentum as Bitcoin (BTC) hovered against the psychological barrier at $ 12,000. After a few weeks of consolidation, the price of Bitcoin finally broke through the resistance zone of $ 12,000.
However, it is not certain that the price will continue to climb to $ 15,000 from here. Is the bullish move a clear breakout or a misstep intended to grab overhead liquidity?
Daily performance of the crypto market. Source: Coin360
$ 12,000 breakout failed to catalyze a stronger rally
As the price of Bitcoin has broken through the crucial resistance at $ 12,000, a massive move is expected to occur. However, the market did not provide any.
BTC / USD 1 day chart. Source: TradingView
The daily chart shows a definitive breakthrough of the last hurdle before the bull market expansion. However, the move above $ 12,000 is not convincing enough to assert and confirm the breakout.
One of the critical indicators of a breakout is the surge in volume, which is lagging far behind this recent surge.
The good part is that Bitcoin is still trading above the 100-day and 200-day moving averages, which supports the current bullish momentum.
An apparent gain of this level, through which support is granted over $ 12,000, would justify and confirm new upward momentum on Bitcoin.
Rashes can lead to scythes
4 hour BTC / USD chart. Source: TradingView
Quite often, a breakout like this leads to a fake. A fake-out is justified by a similar movement. In such a related move, liquidity is taken above recent highs or resistances.
Usually when someone runs, they place their stop loss above the recent high. This gives a very obvious “liquidity pool” as all obvious stop-losses are placed above this high resistance.
Therefore, a move slightly above the recent top can trigger all of these stops / losses, fueling a move in the opposite direction, as shown in the chart as an example.
The crucial barrier remains to be seen with the $ 12,000 level. If this level does not provide support, a similar move towards the lows of the range is likely to occur.
The bearish scenario for Bitcoin
As stated earlier, a fake-out is always a possibility when the price is testing strong resistance to overheads.
3 hour chart of the bearish BTC / USD scenario. Source: TradingView
The crucial part is defined in the red box because it is the previous resistance zone through such a scythe. This resistance zone was broken through in the recent move and must maintain support if the price of Bitcoin is to continue to rise.
If the price of Bitcoin does not find support on this resistance level at $ 12,000, the support / resistance reversal cannot be justified and the price of Bitcoin falls back into the range.
The key support level to watch out for is the $ 11,500 area as it is an untested level and a previous low range. If the price of Bitcoin is between $ 11,500 and $ 12,000, it is likely to test the exact opposite of the range.
In this case, we can define the exact opposite of $ 11,500. More likely would be a continuation of range-related moves in the coming weeks, which would suit altcoins even more.
The bullish scenario for Bitcoin
4-hour BTC / USD bullish scenario chart. Source: TradingView
The bullish scenario is also based on the $ 12,000 barrier as in this case the support would need to be justified on $ 12,000 to justify the continuation.
If the $ 12,000 level continues to hold for support and a support / resistance reversal is warranted, further higher is likely.
In this way, altcoins will start to bleed profusely into their BTC pairs, as BTC takes over the limelight. The next resistance zone for Bitcoin is set at $ 13,000, but a further push towards the $ 15,000 to $ 17,000 areas is on the tables.
However, it all goes down to the $ 12,000 level. Whether or not he gives support is going to move the markets one way or another.
The views and opinions expressed herein are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You need to do your own research when making a decision.
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