Bitcoin is currently experiencing a minor setback, facing resistance at our daily level of $43,612. In this Bitcoin price prediction, we’ll delve into the noteworthy absorption taking place among Bitcoin bulls. It’s crucial to understand what this absorption signifies, especially considering its resemblance to a similar occurrence in November 2023.
The resistance area mentioned earlier aligns with our daily level at $43,612. Bitcoin made a move towards this level, surpassing our previous high by a mere few dollars on both the ByBit and Coinbase charts. This resulted in a brief swing failure pattern, leading to a current downturn of approximately 2.3%.
This daily resistance wasn’t arbitrary; it coincided with the mid-level of our significant ascending Channel. Additionally, on the 4-hour timeframe, examining the entire upper price section with volume revealed a point of control or the largest volume cluster precisely at this resistance area. Despite the rejection, a notable number of traders are initiating new long positions.
Over the past few days, Bitcoin has demonstrated a substantial upside push, recording a 5.5% increase following a swing failure pattern of the previous low. What’s intriguing is that despite this upward movement, there’s a continued interest in new long positions. This is evident in the rise of open interest, indicating money flowing into the market. However, the CVD indicator shows a significant decline, suggesting that larger players are offsetting selling pressure with their limit buy positions.
While the current scenario appears bullish, a historical perspective is essential. A similar bullish divergence occurred in November 2023, the unusual absorption by Bitcoin bulls. Despite the bullish divergence, Bitcoin faced a significant 10% downturn, dropping to approximately $38,000.
Presently, the bullish divergence is evident again on the CVD indicator, creating a theoretically bullish Bitcoin indication. However, caution is advised. If history repeats itself, we might witness another substantial downward move. In the event of a bearish outcome, a potential ABC correction could unfold.
Analyzing the Coinbase chart, a lower high has formed, and applying Fibonacci retracement from the swing high to swing low reveals the accuracy of the 0.786 Fibonacci retracement level. This indicates the possibility of a larger zigzag correction in progress, with the C wave expected to follow.
If this correction materializes, it could result in a five-wave price structure to the downside. Traders should be wary of potential bearish outcomes, especially considering the previous history of a bullish divergence leading to a significant price decline.
For traders looking to navigate this uncertain market, key support lies at the daily level of $42,550. This aligns with the bottom of the ascending channel and the golden Fibonacci ratio. Long positions can be considered with a stop loss just below the previous low, but vigilance is paramount.
However, a potential bearish scenario could unfold if Bitcoin breaks the golden Fibonacci ratio and the diagonal support. In such a case, a more significant downward push might be imminent. Whether trading long or short, stringent risk management is crucial to navigate the current market conditions.
Disclaimer: While there are indications of a bullish trend, traders must exercise caution and remain adaptable to potential market shifts. Whether longing or shorting Bitcoin, having a well-defined strategy and risk management plan is essential in this dynamic market environment.
