Bitcoin price holds key support level as focus shifts back to $12,000
The price of Bitcoin has shown resilience after the bears failed to push the price down below $11,200, which means the overall uptrend is still intact.
As the price of Bitcoin (BTC) showed weakness in the past week, the crucial support zone around $11,200, nevertheless, held. Several arguments were given for the volatility throughout the week with Powell’s speech at Jackson Hole and the expiration of futures and options occurring over the past few days.
But more importantly, the crucial support level at $11,200 didn’t break, which means the focus now shifts back toward the resistance level at $12,000.
The crucial support zone holds as the uptrend remains intact
The crucial support area has held again as the daily Bitcoin price chart shows.
The daily chart shows a clear resistance zone between $11,800-12,000 as well as the support zone, found between $11,100-11,300. This level has also been previously confirmed as support as well.
The $11,100-11,300 area had to hold once more as a drop below this area would almost certainly guarantee a big drop. That’s because, given the previous near-vertical rally, few support zones are found between $10,100 and $11,000.
If the price of Bitcoin drops below the green zone, a heavy drop towards the level of $10,100-10,300 wouldn’t be a surprise. What’s more, the entire upward trend is lost, as well as the range-bound structure, which would likely mean a steep drop.
But since the support level is holding again, the next step for Bitcoin would be a breakout above $11,800-12,000 to make a new higher high.
Double bottom formation signaling a short-term trend reversal
The 2-hour chart of Bitcoin shows a support zone between $11,100-11,250, which was confirmed when the price of Bitcoin didn’t really drop below this level on a higher timeframe.
The first bounce pushed the price toward $11,500, which was clearly rejected with BTC price falling back to the support zone. Once again, it held and created a double bottom pattern, signaling a potential short-term trend reversal.
However, the chart’s upper side shows that the $11,650 area is a strong zone of resistance. If it breaks, further momentum is expected toward $12,000.
The bullish scenario for Bitcoin
The bullish scenario is straightforward after the $11,100-11,200 level held as support through a double bottom formation.
The short-term resistance level has been hit again on Aug. 26, resulting in a slight pullback from $11,500 to $11,200. However, to have a short term trend reversal, a new higher high is needed. Such a higher high will be established if the price holds $11,300 as support and breaks $11,700.
If that occurs, the price of Bitcoin makes new higher highs and higher lows and that’s classified as an uptrend. An apparent breakthrough in this resistance zone would then put $12,000 in the crosshairs.
The bearish scenario for Bitcoin
The bearish scenario is the opposite. Since the fake breakout above $12,000, the momentum is still downward, which may see the price of Bitcoin drop further.
However, as the U.S. dollar is weakening, further downward momentum becomes increasingly unlikely for Bitcoin. If the price of BTC wants more downside, however, a rejection at the $11,600 will need to happen.
If that occurs and a new lower low (a drop below the previous low at $11,100) happens, more downside becomes likely. In that scenario, a rejection at $11,300 would confirm such a scenario.
If $11,000 is lost, potential levels of support will then be found between $10,100-10,400 and $9,600-9,800, where the CME futures gap still remains.
Price analysis 8/26: BTC, ETH, XRP, LINK, BCH, LTC, BSV, CRO, BNB, ADA
On Thursday, U.S. Federal Reserve chairman Jerome Powell is expected to deliver an important speech that will highlight a new strategy of targeting “average inflation.” This means that the Fed might allow inflation to overshoot the 2% target temporarily if it has spent a long time below that level.
If the Fed adopts this new strategy, it could keep interest rates near zero for five years or more, according to a Bloomberg report.
The abundant liquidity is likely to drive asset prices higher across the board and create bubbles that will eventually burst. If this occurs, investors are likely to lose complete faith in the central banks and fiat currencies.
Smart investors are likely to seek the safety of gold and Bitcoin (BTC) during this time of uncertainty. Larger investors have already started accumulating Bitcoin and this has pushed the number of addresses holding over 1,000 BTC to a new record high.
While this is all great news, traders will want to know if the crypto market will extend it’s current up-move or whether a period of extended consolidation is at hand.
Let’s study the charts to find out!
Bitcoin plunged and closed (UTC time) below the 20-day exponential moving average ($11,554) on Aug. 25, which is the first indication that the bulls were losing their grip.
The bulls are currently attempting to defend the $11,100–$10,900 support zone but are likely to face significant resistance at the 20-day EMA.
If the bulls fail to push the price back above the 20-day EMA, a drop to the 50-day simple moving average ($10,728) and then to $10,400 is possible.
Conversely, if the bulls can push the price above the 20-day EMA, a move to $12,113.50 is likely. The bears are likely to defend this level aggressively.
The 20-day EMA has flattened out and the relative strength index is just above the midpoint, which suggests a few days of range-bound action.
The next trending move is likely to start after the bulls push the price above the $12,113.50–$12,460 resistance zone or sink the price below the $10,400–10,000 support zone.
The failure of the bulls to push Ether (ETH) above the $415.634 resistance on Aug. 24 attracted profit booking on Aug. 25 that pulled down the price to the critical support at $366.
Although the bulls purchased the dip on Aug. 25, they are struggling to push the ETH/USD pair above the 20-day EMA ($393), which is a negative sign. This shows a lack of demand at higher levels.
A break and close (UTC time) below $366 could intensify selling and result in a drop to the 50-day SMA ($336). Such a move will suggest that a short-term top has been made at $446.479.
However, if the bulls can push the price above the 20-day EMA, a few days of range-bound action between $366– $415.634 is likely.
XRP closed (UTC time) above the 20-day EMA ($0.284) on Aug. 24 but a lack of buying at higher levels again pulled down the price to the $0.268478 support.
The bulls are currently attempting to defend the $0.268478 support but unless they sustain the price above the 20-day EMA, the advantage will remain with the bears.
If the bears sink the XRP/USD pair below $0.268478, a drop to the 50-day SMA ($0.25) is possible. This is an important support to watch out for because if it cracks, the decline can extend to the 61.8% Fibonacci retracement level of $0.241068.
Contrary to this assumption, if the pair rebounds off the $0.268478 support and rises above the 20-day EMA, then a few days of range-bound action between $0.326113 and $0.268478 is likely.
The bulls failed to push Chainlink (LINK) above the overhead resistance of $16 on Aug. 23 and 24, which attracted profit booking that pulled the price back below the 20-day EMA ($14.49) on Aug. 25.
However, the positive thing is that the lower levels are attracting buying by the bulls, which shows that the sentiment remains bullish. Currently, the LINK/USD pair has again risen above the 20-day EMA.
If the bulls can propel the price above $16, LINK will attempt to resume the uptrend and retest the highs at $20.1111.
On the other hand, if the pair again turns down from $16, the bears will try to sink the price to the 61.8% Fibonacci retracement level of $11.9281.
The rebound from the breakout level of $280 in Bitcoin Cash (BCH) turned down from the 20-day EMA ($288) on Aug. 25, which suggests that the bears are aggressively defending this resistance.
The bulls purchased the dip to the 50-day SMA ($271) on Aug. 25 but if they fail to push the price back above $280, it is likely to attract another round of selling that could sink the BCH/USD pair to $260 and then to $240.
The downsloping 20-day EMA and the RSI in the negative territory suggest that bears have made a comeback.
This bearish view will be invalidated if the pair rebounds off the current levels and rises above the $280–$295 resistance.
Litecoin (LTC) turned around and plunged below the 20-day EMA ($59) on Aug. 25, which suggests selling by the bears on minor rallies.
The next support on the downside is the 50-day SMA ($53) and if this support also gives way, a drop to $51 will be on the cards.
Conversely, if the LTC/USD pair rebounds off the current levels, the bulls will attempt to push the price above the downtrend line. If they succeed, a move to $64 and then to $68.9008 is possible.
The flat 20-day EMA and the RSI close to the midpoint suggest a few days of range-bound action.
The bulls pushed Bitcoin SV (BSV) above the overhead resistance of $200 but could not clear the 20-day EMA ($206) hurdle on Aug. 24, which attracted selling on Aug. 25 that pulled the altcoin back below $200.
The moving averages are on the verge of a bearish crossover and the RSI is in the negative zone, which suggests that the bears have the upper hand.
If the bulls fail to push the price back above $200 within the next few days, the BSV/USD pair is likely to slide to $160 and then to $146.20.
This bearish view will be invalidated if the bulls can push the price back above the downtrend line.
Crypto.com Coin (CRO) turned down from the overhead resistance of $0.176596 on Aug. 25, which suggests that the bears are aggressively defending this level.
However, both moving averages are gradually sloping up and the RSI is in the positive territory, which suggests that the bulls are at a minor advantage.
If the CRO/USD pair rebounds off the 20-day EMA ($0.166), the bulls will once again attempt to scale the price above $0.176596. If they succeed, the uptrend is likely to resume. The first target on the upside is $0.191101 and then $0.20.
Conversely, if the pair turns down and breaks below the 20-day EMA, a drop to the 50-day SMA ($0.157) is possible.
Binance Coin (BNB) turned down from the overhead resistance of $22.93 on Aug. 25 and dropped below the 20-day EMA ($22), which suggests aggressive selling by the bears at higher levels.
However, the bears could not capitalize on the opportunity and sink the BNB/USD pair below the critical support at $20.5710.
This has attracted buying from the aggressive bulls who are attempting to push the price above the downtrend line. If they succeed, a move to $22.93 and then to $23.91 is likely.
On the other hand, if the pair turns down from the downtrend line and plummets below $20.5710, a deeper correction to $19.10 is possible.
Cardano (ADA) plunged to the $0.10–$0.11 support zone on Aug. 25, which is a negative sign. The moving averages have completed a bearish crossover and the RSI is in the negative territory, suggesting advantage to the bears.
Currently, the bulls are attempting to defend the support zone aggressively. However, any recovery is likely to face stiff resistance from the 20-day EMA ($0.129). If the ADA/USD pair turns down from the 20-day EMA, the bears will attempt to sink the price below $0.10.
If they succeed, it will be a huge negative as the next support on the downside is way lower at $0.075.
This negative view will be invalidated if the bulls can push the price back above the 20-day EMA and the overhead resistance at $0.13.
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