Bitcoin, the leading cryptocurrency, has experienced significant volatility in recent weeks. After rallying from $52,568 to an all-time high of $1,08,367, the price sharply retraced to $92,209 on December 20, 2024. Since then, Bitcoin has entered a Flat Correction pattern, consolidating between $92,209 and $99,872. Traders are closely monitoring this range, as a decisive move above or below these levels will dictate the market’s next trend.
Current Market Structure
Flat Correction (ABC Wave)
Bitcoin’s consolidation phase is characterized by a Flat Correction, a three-wave structure (ABC) commonly seen in Elliott Wave Theory. This pattern reflects a temporary pause in the market, where buyers and sellers vie for control.
- Wave A: The initial decline from $1,08,367 to $92,209, marking the correction’s first leg.
- Wave B: A retracement upward that stalled near $99,872, forming a countertrend rally.
- Wave C: The ongoing impulsive decline within the correction, ending near a Rising Wedge pattern.
Rising Wedge Formation
The Rising Wedge, observed near $99,872, is a bearish continuation pattern. This structure typically signals weakening bullish momentum and a potential reversal to the downside. If confirmed, the Rising Wedge could pave the way for a breakdown below $92,209.
Key Levels to Watch
- Support at $92,209
This level has served as a critical pivot during the ongoing correction. A sustained hold above $92,209 could indicate strength and support a potential resumption of the uptrend. - Resistance at $99,872
The upper boundary of the consolidation range and the apex of the Rising Wedge. A breakout above this level would invalidate the bearish structure and signal renewed bullish momentum. - Downside Targets
- $83,625: The first major support below $92,209, derived from Fibonacci retracement levels and prior price consolidation zones.
- $73,555: A significant support level that aligns with previous swing lows, marking a deeper correction if bearish momentum accelerates.
Bearish Scenario
If Bitcoin breaks below $92,209, it would confirm the bearish implications of the Rising Wedge and signal further downside. The Wave-C structure, combined with the wedge’s breakdown, suggests the following scenarios:
- Target at $83,625: The immediate downside target, representing a nearly 9% decline from the current support level. This aligns with the 38.2% Fibonacci retracement of the broader rally from $52,568 to $1,08,367.
- Target at $73,555: A continuation of selling pressure could push Bitcoin to this level, marking a deeper correction of approximately 20% from $92,209. This zone corresponds to the 50% Fibonacci retracement and previous demand levels.
Indicators Supporting Bearish Outlook
- Rising Wedge Breakdown: The formation near $99,872 indicates waning bullish momentum.
- Momentum Indicators: RSI and MACD are showing bearish divergences, signaling a potential reversal.
- Volume Analysis: Declining volume during recent upward moves suggests weak buyer interest, supporting the bearish case.
Bullish Scenario
For Bitcoin to resume its uptrend, two conditions must be met:
- A strong hold above the critical support at $92,209.
- A decisive breakout above $99,872, invalidating the Rising Wedge and confirming bullish momentum.
Upside Potential
- Breakout Target 1: If Bitcoin clears $99,872, the next target would be the psychological level of $1,00,000, followed by a retest of the all-time high at $1,08,367.
- Breakout Target 2: A continuation of the rally could extend toward $1,15,000, based on Fibonacci extensions and historical price trends.
Indicators Supporting Bullish Outlook
- Support Holding Strong: Repeated bounces from $92,209 suggest buyer interest at this level.
- Bullish Divergences: Positive divergences on shorter timeframes hint at a possible reversal in momentum.
- High-Timeframe Strength: The broader trend remains bullish, as Bitcoin continues to trade well above its 200-day moving average.
Market Sentiment and External Factors
Market Sentiment
- Neutral to Bearish: Current market sentiment leans cautious, with traders awaiting a decisive breakout or breakdown. The consolidation phase reflects uncertainty, and a clear direction is yet to emerge.
Macro Factors
- Regulatory Developments: Increasing regulatory scrutiny could impact market sentiment, influencing short-term price movements.
- Economic Data: Bitcoin’s price often correlates with macroeconomic trends, such as interest rate decisions and inflation data.
- Institutional Activity: Institutional buying or selling can significantly impact price trends, particularly at key technical levels.
Trading Strategies
For Bearish Traders
- Short Below $92,209: A confirmed breakdown could present an opportunity to short Bitcoin, targeting $83,625 and $73,555.
- Stop-Loss Placement: Above $99,872, to account for potential bullish invalidation.
For Bullish Traders
- Buy Above $99,872: A breakout above resistance could signal the resumption of the uptrend, targeting $1,08,367 and beyond.
- Stop-Loss Placement: Below $92,209, to manage downside risk.
For Range Traders
- Buy Near $92,209: Capitalize on bounces within the range, with a target near $99,872.
- Sell Near $99,872: Anticipate rejection at resistance, targeting a move back toward $92,209.
Conclusion
Bitcoin’s consolidation phase between $92,209 and $99,872 represents a critical juncture in its market structure. The outcome of this range will determine whether the cryptocurrency resumes its uptrend or enters a deeper correction.
Bearish Outlook
A breakdown below $92,209 would confirm the bearish implications of the Rising Wedge, targeting $83,625 and $73,555.
Bullish Outlook
A breakout above $99,872 could signal renewed bullish momentum, with targets at $1,08,367 and potentially higher levels.
For traders, this consolidation phase offers opportunities to capitalize on both sides of the market. However, careful monitoring of key support and resistance levels, as well as volume and momentum indicators, will be essential in navigating this pivotal period for Bitcoin.
