Bitcoin is maintaining its position near $114,000 as it undergoes a crucial support test, with market participants keenly observing for indications of a continued bullish trend. After a robust close last week, the cryptocurrency appears to be attempting to secure support at vital price points, particularly around $113,500 and the 21-week exponential moving average (EMA), viewed as pivotal for the next directional momentum.
As the week began, Bitcoin consolidated around the $114,000 mark following a buoyant close that lingered above key support levels. Market analyst Rekt Capital noted that Bitcoin successfully closed above both the 21-week EMA, currently at $111,200, and the $114,500 resistance zone. The ongoing retest of these levels, a typical occurrence after such significant closes, is critical for determining future price action.
Rekt Capital articulated that Bitcoin’s recent closing above the 21-week EMA and the $114.5k zone indicates a strong market position, even as a brief dip into these levels may occur. He confirmed that this retest process is already underway.
During trading on Monday, Bitcoin saw a bounce at the $113,500 level—a point highlighted by crypto investor Ted Pillows as crucial in determining the immediate trajectory. Pillows emphasized, “As long as Bitcoin holds this, we are going higher. If BTC loses this level, expect a correction towards the $110,000 level.”
On the technical front, despite the range-bound price movement, certain indicators suggest room for upward momentum. Notably, the hourly Relative Strength Index (RSI) demonstrates hidden bullish divergence, a potential signal for trend continuation when the RSI makes lower lows while the price establishes higher lows. This divergence hints at a prospective short-term rebound.
Nonetheless, the long-term momentum appears to be waning, as the RSI on higher time frames indicates weakening strength, forming lower highs while Bitcoin pushes towards elevated price points. This dynamic suggests that while immediate bullish strength may be present, broader trends could face headwinds.
As Tuesday marks another day of trading, Bitcoin hovers around the $114,000 threshold while maintaining support at $113,500. The critical question looms: Will this retest solidify a breakout, or could it pivot towards a downturn? A sustained hold at $113,500 might pave the way for new local highs.
Conversely, a breach of this level may trigger a drop towards $111,200 or even the $110,000 territory, remaining within a broader trend range yet potentially stalling immediate upward aspirations. As the Federal Reserve’s interest rate decision approaches this week, trader caution prevails, with close attention being paid to price movements and RSI indicators to gauge future developments.
In light of external economic factors, broader markets exhibit tentative behaviors ahead of the Fed’s interest rate decision. Traditional stock futures, including the S&P 500, showed slight cooling ahead of market openings. Typically, risk assets like Bitcoin react notably to shifts in monetary policy and have experienced heightened volatility surrounding rate decisions.
Ted Pillows highlighted a pattern where Bitcoin generally prints local lows on Tuesdays, suggesting the possibility of further downside testing early in the week—a dynamic that aligns with observed trading behaviors in the face of macroeconomic events.
Despite the prevailing caution among traditional markets, some analysts remain optimistic about asset growth, with Mosaic Asset Company’s newsletter proclaiming, “Evidence of economic growth is boosting the earnings outlook while loose financial conditions are a catalyst for more growth.” They also noted that potential rate cuts might bolster both stock and crypto markets, further instilling confidence.
As Bitcoin rests near the critical $114,000 level, traders are left at the edge of their seats, eagerly awaiting confirmation of either a breakout or a downturn amidst this significant support retest.
