Bitcoin faces critical moment: Will long-term support zones hold?

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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