Bitcoin faces critical moment: Will long-term support zones hold?
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Bitcoin price analysis: December 21, 2024
Short-term technical overview
Bitcoin has seen a volatile week, reflecting the broader cryptocurrency market's nature. Following a brief surge above the critical long-term resistance at $103,484, Bitcoin prices skyrocketed to test the $107,970 resistance level. However, this upward momentum was short-lived as selling pressure dominated, pushing prices down more than 13% after the Federal Reserve's recent announcement indicating fewer interest rate cuts in 2025.
Such volatility around major announcements underscores a typical pattern in the cryptocurrency market, providing traders with valuable insights by carefully observing price behaviours and patterns. Notably, the recent reversal coincides with a classic price candle reversal pattern observed on the daily timeframe. This pattern preceded a three-day decline, as shown in the attached daily chart.
Current price action
As of December 21, 2024, and heading into the weekend, Bitcoin has demonstrated resilience after testing the $91,735 zone for the fourth time since mid-November. Bitcoin currently trades at $98,996, marking a recovery from the recent lows. Despite this bounce, the weekly trading activity remains in the red, and December has only a few trading days left. Notably, the price hovers slightly above the monthly opening level, highlighting an unstable balance in market sentiment.
Key levels to watch
Long-term view:
- November's closing level and December's opening level remain pivotal. These zones have acted as essential support levels, influencing the long-term bullish trend.
Short-term focus:
- The $100,710 zone (current weekly opening level) serves as an immediate short-term resistance level to reclaim.
- If the price fails to hold above the key monthly support level, further downside could target the following levels:
- $90,000
- $85,530
- $81,045
However, a sustained move above the monthly support could set the stage for a potential retest of the psychological $100,000 mark, reigniting bullish momentum.
Outlook and strategy
Bitcoin's ability to defend and rebound from the $91,735 support zone will be critical for both short-term and long-term trends. While the long-term outlook remains positive, given Bitcoin's over 100% year-to-date gain, the near-term technical signals suggest caution. Traders should closely monitor the weekly closing levels to assess the potential continuation of the bearish correction or a resumption of upward momentum.
In summary, the current situation presents a make-or-break moment for Bitcoin. If key support zones hold, the market could stabilize and reattempt higher levels, with $100,000 as an immediate target. Conversely, breaking below these support levels could accelerate the correction, aiming for targets near $85,530. As always, prudent risk management and adherence to trading plans are paramount in navigating this volatile market.
Bitcoin daily chart
Bitcoin weekly chart
Bitcoin monthly chart
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