Trader outlines near-term support and resistance levels for Bitcoin
The current market situation is explained by a practicing trader and founder of the project Crypto Shaman Vadim Shovkun.
The market is in extreme fear — on January 8, 2022, according to the Fear & Greed index, a reading of 10 was recorded, a level previously seen only rarely. We will examine whether panic is warranted and when it might be relatively safe to regain a bullish mood from the market.
A pattern BUI was formed after a breakout from the range $46 415-$52 045. The breakout occurred impulsively, on abnormal volume, with the price moving below the PoC of the penultimate rally. This was discussed in the previous review.
There are currently some signs of a potential recovery of long positions that warrant consideration. Two hits to price lows (on the Binance spot) occurred sluggishly; there is protective buying volume forming at the $41 000 level, as volume rises on minimal moves.
There is also a small bullish divergence on the lower hourly timeframes. Market sentiment remains very negative.
Nevertheless, there are still many technical arguments in favour of a decline. The impulsive BUI, not yet engulfed, points to the sellers’ total dominance. It is worth considering the price action at the end of September: the market began forming the final wave of the rally without clearing the liquidity that had accumulated over the week.
The market has now fully absorbed the wave; the price has approached this liquidity and another shelf has formed.
A close below $39 500 would be a serious sign of a transition to a bearish phase, above $48 480 — a return to the range after a formed false breakout, and holding above PoC of this range and the previous rally. After that, the market could be viewed as a buying opportunity.
Based on the technical observations above, it is most likely that the price will rebound upward from current levels, up to a retest of the range $46 415-$52 045. However, a new low below $39 500 is expected thereafter. Whether this move will be accompanied by a breakout is hard to gauge, but the probability of reaching that level is high.
The zone $44 950-$46 250 is an excellent area to search for short positions, as they would effectively be at the turning point of the local bearish trend.
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