As the price of Bitcoin (BTC) showed weakness last week, the crucial support area around $ 11,200 nonetheless held. Several arguments were made for volatility throughout the week with Powell’s speech in Jackson Hole and the expiration of futures and options over the past few days.
But more importantly, the crucial support level at $ 11,200 hasn’t broken, meaning that attention is now shifting to the resistance level at $ 12,000.
Daily performance of the crypto market. Source: Coin360
Crucial support area holds as uptrend remains intact
The crucial support area held up again as seen in the daily Bitcoin price chart.
BTC / USD 1 day chart. Source: TradingView
The daily chart shows a clear resistance area between $ 11,800 and $ 12,000 as well as the support area, located between $ 11,100 and $ 11,300. This level was also previously confirmed as support.
The area of $ 11,100 to $ 11,300 had to be held again, as a drop below this area would almost certainly guarantee a big drop. Indeed, given the previous near vertical rally, few support areas are between $ 10,100 and $ 11,000.
If the price of Bitcoin drops below the green zone, a sharp drop to the $ 10,100-10,300 level would not be a surprise. Also, all of the uptrend is lost, along with the beach-related structure, which would likely mean a steep drop.
But as the support level holds, the next step for Bitcoin would be to break above $ 11,800-12,000 to hit a new higher high.
2 hour BTC / USD chart. Source: TradingView
Bitcoin’s 2-hour chart shows a support area between $ 11,100 and $ 11,250, which was confirmed when the price of Bitcoin did not really drop below that level over a longer period.
The first rebound pushed the price towards $ 11,500, which was clearly rejected with the price of BTC falling back into the support area. Once again, he held on and created a double bottom pattern, signaling a possible short term trend reversal.
However, the upper side of the chart shows that the $ 11,650 area is a strong resistance area. In case of rupture, a new impetus is expected around $ 12,000.
The bullish scenario for Bitcoin
2 hour bullish BTC / USDT scenario chart. Source: TradingView
The bullish scenario is simple after the 11,100-11,200 $ level held as support by a double bottom formation.
The short-term resistance level was hit again on August 26, causing 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 level will be established if the price is $ 11,300 as support and breaks $ 11,700.
If this happens, the price of Bitcoin will hit new highs and higher lows, which is considered an uptrend. An apparent breakthrough into this resistance zone would then put $ 12,000 in the crosshairs.
The bearish scenario for Bitcoin
Bearish 2 hour BTC / USD scenario chart. Source: TradingView
The bearish scenario is the opposite. Since the false breakout above $ 12,000, momentum is still on the downside, which could cause Bitcoin’s price to drop further.
However, as the US dollar weakens, further downward momentum becomes increasingly unlikely for Bitcoin. If the price of BTC wants more decline, however, a release to $ 11,600 will have to occur.
If this happens and a new lower low (a drop below the previous low at $ 11,100) occurs, more decline becomes likely. In this scenario, a rejection of $ 11,300 would confirm such a scenario.
If $ 11,000 is lost, then potential support levels will be between $ 10,100-10,400 and $ 9,600-9,800, where the CME futures gap remains.
The views and opinions expressed herein are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You need to do your own research when making a decision.
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