As noted in last week’s review, bitcoin experienced a significant drop last Sunday night, plummeting to $111,800. The price then rebounded to retest the $113,800 resistance level and the 21-day EMA at $114,000, but was rejected, falling back to the $111,300 support level. This point provided another opportunity for bulls to bounce back to the 21-day EMA, yet they were denied access again above the $113,800 resistance level, dropping just below the weekly support at $109,500 on Thursday. From that Thursday low, the price rallied, closing the week at $112,225.
Key Support and Resistance Levels Now
Since the price closed above the 21-week EMA at $109,500 to end the week, bulls will aim for this support to hold moving forward. $109,500 should act as the floor as we enter this week if bulls want to establish a higher weekly low and turn the tide. The next support level down is $105,000, with a potential major reversal around $102,000. Losing $102,000 would lead to significant long-term support at $96,000.
On the upside, bulls will target a close above the $115,500 resistance level to re-establish the uptrend. Successfully achieving this would instill confidence in the bulls to challenge the $118,000 resistance again and likely surpass it. $121,000 sits above as a gateway to new highs, although it may not hold for long if a weekly close above $118,000 occurs.
Outlook For This Week
Expect prices to re-test the $109,500 low early in the week, with the potential to solidify this level as support for a bullish move back up to $113,800. Strong buying pressure will likely be necessary to push past the $115,500 resistance level this week, so anticipate that this level could limit movement if $113,800 is conquered. Bulls will aim for a green candle this week to confirm last week as a higher low.
Despite this, the bias remains bearish on the weekly chart, suggesting the $113,800 resistance level may hold in the short term. If the daily chart loses $109,500, it could lead to another significant price drop this week, testing new lows in the $105,000 to $102,000 support zone.
Market mood: Bearish — with a significant red candle closing the week, bears are firmly in control. Bulls will need a strong showing this week to defend the 21-week EMA support.
The next few weeks
The weekly chart remains bearish until proven otherwise. Bulls must shift the bias back in their direction to nurture more positive price movement moving forward; this is achievable with a strong close to end this week. With September’s interest rate cut now concluded, the markets are watching for more rate cuts in the upcoming October and December FOMC meetings to maintain capital flow. Investors will closely monitor US financial reports in the coming weeks for data that supports further cuts. Any barriers to further cuts in the data will likely lead to more bearish price movement and additional selling.
Terminology Guide:
Bulls/Bullish: Buyers or investors anticipating a price increase.
Bears/Bearish: Sellers or investors forecasting a price decline.
Support or support level: A level where the price is expected to hold for the asset, initially at least. More touches on support weaken it and make it more susceptible to failing.
Resistance or resistance level: Opposite of support. The level likely to reject the price, initially at least. More touches at resistance weaken it and increase the likelihood of failing to hold back the price.
EMA: Exponential Moving Average. A moving average that gives more weight to recent prices compared to earlier prices, minimizing the lag of the moving average.
