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Bitcoin’s recent surge above $100,000 has kept the market tense as bullish momentum attempts to establish a new liquidity zone beyond this milestone. This momentum has caused significant volatility over the past 24 hours, with Bitcoin fluctuating between $99,701 and $106,307 during this period.
This has intense volatility allowed Bitcoin to reach a daily close above a key converging resistance level that had limited price action over the past month. Despite this progress, Bitcoin continues to test the $106,000 upper limit, and a decisive rejection at this level could trigger a downturn, potentially sending the price down to $91,000.
Bitcoin successfully closes above converging resistance
According to technical analysis of crypto analyst Rekt Capital has secured Bitcoin a daily close above a significant converging resistance level. This was noted in a technical analysis of Bitcoin’s daily price action posted on social media platform X, highlighting a key event in Bitcoin’s rally. The converging resistance in question is defined by two crucial elements: a horizontal resistance trendline at $101,165 and a descending trendline, which has been consistently marking lower highs since Bitcoin hit its all-time high of $108,135 on December 18, 2024.
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Since breaking out of this confluence area, Bitcoin has done just that managed to get to $106,000but candlestick formations are starting to reveal a slowdown in momentum. In particular, Bitcoin has created a hammer candlestick and a doji candlestick in consecutive days, both of which are traditionally associated with a slowdown in momentum or potential market indecision. This suggests that the bullish momentum may be waning just as quickly and opens the possibility for a downside move to retest the confluence area where it just broke out.
BTC must remain above this level
Maintaining a position above the breakout area is crucial in determining Bitcoin’s next move. As Rekt Capital highlighted, a sustained rejection at the $106,000 level could trigger a downward move to retest the confluence area, which is marked by the green circle in the chart above.
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If Bitcoin tests this zone again, two possible scenarios could unfold. The first, and more bullish outcome, would involve a successful retest followed by a recovery at the confluence area. This behavior is characteristic of post-breakout price action, where a pullback strengthens the new support and allows the price to gather momentum for another leg up.
The second scenario, on the other hand, is more bearish. If Bitcoin fails to stay above the confluence support, the cryptocurrency could face increased selling pressure cause a deeper correction.
According to Rekt Capital’s analysis, the next major support levels are $91,070 and $87,325. A decline to these levels would represent a substantial pullback and could revise market expectations for the near term.
Bitcoin is currently trading at $106,100.
Featured image from Unsplash, chart from Tradingview.com