Bitcoin experienced significant volatility over the past week, marking a notable decline that started on Sunday night. The cryptocurrency plummeted to a low of $111,800 before making a brief recovery to test the resistance levels at $113,800 and the 21-day Exponential Moving Average (EMA) at $114,000. However, it faced rejection at these levels, leading to a subsequent drop to a support level of $111,300. This level provided a foothold for bulls, allowing for another bounce back towards the 21-day EMA. Yet, the price again fell short of breaking above the $113,800 resistance, further declining to just below the critical weekly support level at $109,500 by Thursday.
A rally from this Thursday low enabled Bitcoin to close the week at $112,225, slightly above the 21-week EMA at $109,500. This closing price offers a glimmer of hope for bullish investors, with this support level now likely to act as a cornerstone for upcoming trading. Maintaining the $109,500 support is essential for the bulls to establish a higher low and reverse the current downward trend. Should this level fail, the next support is anticipated at $105,000, with potential downtrends reaching as low as $102,000. A breach of the $102,000 mark could open the floodgates to a more significant drop, leading towards long-term support at $96,000.
Conversely, on the upside, bulls need to secure a close above the $115,500 resistance to solidify an uptrend. Achieving this would bolster the bullish sentiment and allow for more aggressive attempts at the $118,000 resistance, viewed as a critical hurdle. Beyond this, the $121,000 mark would serve as an entry point to new highs, provided it is not too resistant following a weekly close above $118,000.
For the beginning of this week, traders can expect a re-test of the $109,500 level, with hopes of confirming it as a supportive barrier for a rally back up to $113,800. However, analysts warn that substantial buying pressure will be required to breach the $115,500 resistance; thus, this level may act as a cap if the bulls can’t overcome the immediate challenge at $113,800. Given the current bearish bias on the weekly chart, the anticipation is that the $113,800 resistance will likely hold firm in the short term. Should Bitcoin fall below the $109,500 support in the daily chart, it could usher in another sharp decline, testing lower support levels between $105,000 and $102,000.
Market sentiment remains largely bearish. The week concluded with a pronounced red candle, indicating strong control from bearish investors. The bulls face the formidable task of defending the 21-week EMA support to rebound effectively. Over the next few weeks, as the weekly chart continues to reflect a bearish outlook, it will be vital for bullish investors to gain momentum to initiate positive price action.
With September’s interest rate cut now in the rearview mirror, market participants are turning their attention to anticipated additional cuts in the upcoming October and December FOMC meetings. Economic data from the US will be keenly scrutinized for signs that support further rate reductions. Any adverse economic indicators may provoke heightened bearish activity and increased selling pressure as investors recalibrate their expectations.
