Earlier this week Bitcoin (BTC) price entered a bullish breakout to $11,725 following the previous week’s news that Square purchased $4,709 BTC but since then the price has slumped back into a sideways range.
Several rejections near $11,500 and the recent news of OKEx halting all withdrawals as its CEO ‘cooperates’ with an investigation being carried out by Chinese authorities is also weighing on investor sentiment and Bitcoin price.
The wave of negative news has pulled the majority of altcoin prices back into the red and extinguished the newly found bullish momentum Bitcoin displayed.
The daily time frame signals that losing $11,200 could open the door for the price to retest $11,100, a level which resides in a VPVR gap and would probably give way to a further drop to $10,900.
According to Cointelegraph Micheal van de Poppe, there is:
“Significant support at $11,000 is now a must-hold level to resume the bullish momentum, which may find difficulty clearing current levels as renewed coronavirus lockdowns are spooking investors.”
Van de Poppe suggests that if Bitcoin loses the $11K support there is a possibility of the price falling below $10K to the 200-MA at $9,750 which is near a CME gap.
Although the current price action is disappointing to bulls who want to see a retest of $12K, taking a bird’s-eye view shows that there are multiple factors playing out in Bitcoin’s favor.
Furthermore, volumes are surging again at multiple BTC futures exchanges and on Friday Cointelegraph reported that Bakkt Bitcoin exchange reached a new record-high for BTC delivery.
Bitcoin has also largely ignored the majority of the negative news over the past two months and held above the $10K level as buyers show consistent interest in purchasing near this level.
Support retests are expected
It’s also worth noting that only about 1.5 weeks have passed since Bitcoin exited a 24-day long compression phase which was followed by the most recent breakout to $11,750.
Since the bullish breakout occurred the price has retested the $11,200 level as support but a deeper pullback to the 20-MA to test $11K as support wouldn’t be out of the ordinary. Even a drop to the $10,650 level near the 100-MA would simply be a retest of the descending trendline from the 2020 high at $12,467.
For the short term, it seems likely that Bitcoin price will trade in the $11,400-$9,700 area, a range which may turn out to be a swing trader’s paradise.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.