The Bitcoin price (BTC) broke the $12,000 resistance level, which led to a new annual high for the number one crypt currency by market capitalization.
However, the breakout was short-lived, as the BTC price fell to $11,650 in the last few days, marking a drop of almost 10% since the breakout. This caused the Bitcoin price to fall back below the crucial resistance zone of $12,000. This collapse is causing investors and traders to be on the lookout for more downside as several bearish arguments emerge.
Bitcoin returns to range after a failed break
The price of Bitcoin Billionaire tried to continue the upward momentum with a break of more than $12,000. However, the breakout failed, as the chart shows.
The 4-hour chart shows an apparent breakout attempt above $12,000. However, the breakout failed to convert the $12,000 resistance into support, which is essential for continuation.
As the change in support/resistance was unsuccessful, the price of Bitcoin reentered the range. Such a failed breakout is often also classified as a blow to the liquidity group. This means that the price recovers above the resistance to take advantage of the liquidity and the stop/losses of the short positions.
When those orders are stopped or hit, the market has the liquidity to go in the opposite direction. This is often confirmed through weak buying attempts in the previous resistance zone.
In that sense, the break was not met, which means that the $10,800 and $11,200 support levels are back in play.
As the graph shows, there is still an open gap at $9,700. As most gaps are filled, this is an important level to consider.
Along with the open gap, there is also a possible downward divergence. The bearish divergence is yet to be confirmed, as it depends on whether the Bitcoin price loses the crucial support level at $11,400-11,600.
Once the Bitcoin price falls below that support level, the bearish divergence is confirmed and further corrections towards the 100-day and 200-day moving averages (MA) are likely.
These MA converge with the open CME gap at $9,700 and provide multiple arguments for a possible bottom formation in this correction.