While Bitcoin (BTC) has been showing weakness in recent weeks as BTC price dropped from $12,000 to $10,000, some light at the end of the tunnel is showing up.
The price of Bitcoin showed support at the psychological barrier of $10,000 and bounced numerous times as it’s already close to $11,000. Most importantly, can Bitcoin break through this crucial area and continue its bullish momentum?
Bitcoin holds $10,000 to avoid any further correction on the markets
The price of Bitcoin couldn’t hold above $11,100 at the beginning of September and dropped south, causing the crypto markets to tumble down with it.
BTC/USD 1-day chart. Source: TradingView
Given the fast-paced breakout above $10,000 in July, a large gap was created without substantial support zones. As no support zones were established, the price of Bitcoin fell to the $10,000 area within one day.
This $10,000 area is a crucial support area, as it was previously a resistance area, particularly around the time of the Bitcoin halving that occurred in May. But now, flipping this key level for support increases the chances of further upward continuation.
Is the CME gap getting front-run by the markets?
As the price dropped from $12,000 earlier this month, most traders and investors had their eyes on the potential closure of the CME gap.
BTC/USD CME 1-day chart. Source: TradingView
However, the CME gap didn’t close as buyers stepped in above the CME gap. The price of Bitcoin reversed at $10,000 and not at $9,600.
In that regard, the likelihood of not closing this CME gap increases by the day. Not all CME gaps will get filled as it’s just another factor to consider for traders, just like support/resistance flips or the Fibonacci extension tool.
What’s more likely is a substantial range-bound period for Bitcoin, which may last for months. A similar period was seen in the previous market cycle in 2016.
A potential scenario for Bitcoin
BTC/USDT 1-hour chart. Source: TradingView
As the chart shows, a current uptrend is clearly visible since the crash with continuation likely.
The upper resistance level is $10,900. If this is broken, the next crucial hurdle is found at $11,100-11,300. This resistance zone is the essential level on higher timeframes as well, which, if broken, may result in a massive rally.
BTC/USDT 1-day chart. Source: TradingView
The price of Bitcoin may then see a quick rise to the next major resistance zone at $12,100.
However, a breakthrough in one-go is less likely as this would only be the first test of the previous support zone ($11,100).
Therefore, a potential continuation of the sideways range-bound structure shouldn’t come as a surprise and would be similar to what happened right after the 2020 halving.
To recap, clearly-defined support zones are found at $9,200-9,500 and around $10,000; the resistance zones are at $11,100-11,300 and $11,900-12,200.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.