Market Overview: Bitcoin
This week, Bitcoin has kept trading around and above the $100,000 mark, the major resistance. This price level acts as a magnet, drawing attention as the major battleground for traders.
With December marking the final month of the year, Bitcoin has already achieved an extraordinary 135% gain from its 2023 close—a testament to its increasing acceptance and commercialization. The introduction of Bitcoin ETFs has catalyzed institutional participation, with large players potentially holding positions until year-end to secure their winners. These factors collectively create a strong gravitational pull around the $100,000 level, shaping the dynamics of the current market.
Bitcoin
The Weekly chart of Bitcoin
The weekly chart showcases a clear market cycle transition, with Bitcoin breaking out from a six-month trading range between $50,000 and $70,000. This breakout was decisive, breaching the March 14 previous all-time high and signaling a shift into a bullish phase. Such breakouts my end up as a spike and channel bull trend, with the next measured move targeting $120,000. The projection is based with the monthly chart analysis.
However, the resistance at $100,000 poses a significant hurdle. As a psychological round number and the doubling point for positions initiated at $50,000, it attracts substantial profit-taking and cautious positioning. This level also aligns with the measured move target of the six-month trading range, amplifying its importance.
Key support levels include $90,000 and $80,000, with a more robust support near $74,000, the breakout point of the six-month trading range. Should a deeper correction occur, the $50,000–$70,000 range may act as a magnet, potentially leading to a bounce up and sideways trading before any continuation of a downward move.
The 5-bar bull micro channel on the weekly chart indicates ongoing bullish intent, though the current inside bar reflects a pause. This consolidation suggests a potential setup for sell limit orders above the high or stop sell orders below the low. Without a strong consolidation above $100,000, bulls may hesitate to buy a pullback in the micro channel, favoring a reentry near $85,000 or lower. Conversely, bears anticipate a test of the $74,000 breakout point, and hence, those selling here aim for a $25,000 move downwards.
Traders should manage expectations for sideways trading until year-end, as a major downward move appears unlikely until 2025. This environment emphasizes the importance of discipline, as both bulls and bears await clearer signals near key levels.
The Daily chart of Bitcoin
On the daily chart, Bitcoin exhibits a spike and channel bull trend, with notable trading range characteristics lately. The December 5th breach of $100,000 marked a sharp spike to an all-time high of $104,000, followed by an equally sharp reversal. This raises the possibility of December 5th high being the major high, and therefore, form a higher high major trend reversal.
For bulls who entered during the breakout between $75,000 and $85,000, holding positions while Bitcoin remains above medium-term supports like the 20-day EMA is a sound strategy. However, scaling out near $100,000 is prudent, allowing for reentry on a subsequent bull breakout.
Support levels are key battlegrounds for limit order bulls, who will likely dominate these zones by entering long positions or averaging down. This activity will reinforce upward pressure, making bearish setups challenging unless accompanied by strength. A bear breakout could create opportunities for selling pullbacks, but only if the move is, as mentioned, strong.
Currently, a Head and Shoulders Top pattern is developing—a trading range formation that can break in either direction. Bulls interpret this as an accumulation range, while bears view it as a distribution range. The market’s perception of resistance tilts expectations toward a downside break, with bears targeting a move to $74,000, the breakout point of the six-month trading range. Bears will not be willing to scale in higher in case of a bull breakout.
However, bulls remain prepared for a strong breakout, aiming for $120,000 based on a monthly measured move projection. They are also likely to scale in between $74,000 and $85,000 in case the price drops, reinforcing the buy zone and the broader upward bias.
Traders should anticipate a period of sideways trading as the year concludes, with both bulls and bears positioning themselves for the next significant move.
Thank you for engaging with this analysis. Your feedback and insights are invaluable, and we invite you to share your thoughts and strategies. May your trading be successful!
Market analysis reports archive
You can access all the weekend reports on the Market Analysis page.
Hey Josep and many thanks for your detailed report!
Isolating the bullish sentiment, wondering if the monthly chart suggests a wedge top contemplating by December 2017 high – April & November 2021high as well as November 2024? In all 3 tops PA was that climatic and far above 20ema forces the price to immediately reverse toward the 20ema. In addition, November 2024 is a symmetrical 2nd leg up (trap?) composes from August 2024 low vs September 2023 low with March 2024 high as 1st leg. November 2024 high is also a MM composes from August 2024 low with March 2024 high.
Yes, price my climb further but the structure seems challenging technical wise. Your thoughts?
Hi Eli,
Thank you for your thoughtful observations and detailed breakdown. Your points about the wedge top on the monthly chart across the highs you mentioned (December 2017, April & November 2021, and potentially November 2024) are spot on. The harmonic nature of these highs relative to time cycles makes the pattern compelling.
I agree that the monthly chart suggests a wedge top, as the price action near these peaks has been climatic, with notable reversals back toward the 20 EMA following each occurrence.
Your observation of the two-leg move (from the August 2024 low to March 2024 high as the first leg, and from September 2023 low to November 2024 high as the second) is excellent.
Building on this, after such a strong second leg breaking above prior highs, there’s often a sideways-to-up phase, potentially forming a third leg before exhaustion sets in.
The weekly EMA aligning with the breakout point of the 2024 6-month trading range reinforces the likelihood of a test at that level.
The $100,000–$120,000 range is a plausible technical potential top, especially as the measured move based on the 2021 high to 2022 low drawdown lines up with those levels.
Beyond that, we would need to rely on future price action for additional patterns or target projections, potentially incorporating psychological levels like percentage gains or large round numbers.
Your analysis adds excellent depth, and I look forward to discussing the next developments with you.
Josep