Bitcoin (BTC) has seen an impressive 44% rally for ten green days in a row. This rally and the sizeable number of green days caused a change in sentiment. Nearly two weeks ago, the market was like a funeral, with many anticipating another $ 20,000 loss.
However, after the breakout above $ 31,000, sentiment has shifted completely. The current sentiment is the expectation that Bitcoin will soar to $ 100,000 or more in the second half of this year while on-chain analysts are back on track.
Will Bitcoin break up from here or will a healthy correction take place? Let’s take a look at the tech.
$ 42,000 resistance stops Bitcoin outbreak
The weekly chart shows the current range-bound construction for BTC / USD. With this construction there was no breakout. Last week, the price of Bitcoin tried to break through the resistance zone but has not yet been able to force a breakout.
Therefore, the conclusion is that the market is still uncertain about the market direction at this stage. However, the weekly chart is also showing obvious support in the $ 28,000- $ 31,000 area. This level has been tested multiple times and still holds up as a support despite the extreme bearish euphoria the last time Bitcoin price visited this area.
Eventually, when the market wants more information on direction, the lower time frames often point to additional clues that should be watched.
Bitcoin daily chart prepared for healthy correction
Bitcoin’s daily chart doesn’t tell us much, despite the recent rally being a steep staircase of green candles.
This rally not only showed the interest of the market, but also that the most popular predictions are often wrong. Lots of people expected another crash to $ 20,000 when the price of Bitcoin swung around $ 30,000. On-chain analysis shows that short-term owners have sold heavily in this area as they expect another correction, while long-term owners have accumulated heavily.
Thus the exact opposite of a correction took place. Bitcoin rebounded 44% while altcoins saw 70% -150% gains.
If the price of Bitcoin cannot break any further above $ 42,000, a potentially higher low scenario in the region around $ 36,000 or $ 33,000 can be validated.
A significant corrective move to $ 33,000, however, would not be desirable if the market is really bullish, as such a correction would give the laggards another entry position.
Additionally, a correction to $ 36,000 would result in a higher low, which would confirm a market trend change. After a higher high, a higher low confirms a trend change and the bullish divergence, making the $ 36,000 scenario the optimal level for it.
Total market capitalization even with great resistance
The total market capitalization of cryptocurrencies has seen a devastating and rapid drop of 55%, causing sentiment to turn from euphoria to depression.
However, looking at the graph, a healthy and beautiful retest was done at the $ 1.1 trillion level. This level was not tested during the entire ascent. Now it finally got that retest which is causing buyers to step in.
This level is comparable to the $ 28-31K region for Bitcoin that passed multiple tests. However, crypto’s total market cap doesn’t seem ready for an upside breakout as it is currently facing a critical zone of resistance at $ 1.75 trillion.
The red zone has shown resistance several times and formed an area-bound construction. In this structure, a higher low is required to confirm a turnaround. In that regard, a higher low at $ 1.35 trillion would be a good level for the bull market to continue. If total market cap rises above $ 1.75 trillion, new all-time highs are likely.
Important levels to watch out for in a shorter period of time on Bitcoin
The 1 hour chart for Bitcoin shows a clear picture of the current market. A bearish divergence is noted in the 4 hour period, which is confirmed when the price of Bitcoin falls below $ 38,500.
On the 1-hour chart, the price of Bitcoin fell below the support level of $ 40,800. This decline means that a market collapse has occurred and the subsequent support had to be tested. The next level of support is at $ 38,600.
The collapse didn’t have much volume, however, as the actual stops are below the recent low of $ 38,500. Therefore, a bigger correction towards $ 36,500 and $ 35,000 is on the table if the market collapses again.
Such a correction would correct the entire market, which could also drop Ether (ETH) to $ 2,300 and $ 2,000, respectively.
The critical levels on the downside are at $ 38,500, as well as $ 36,500 and $ 35,000.
After all, the key resistance to the price of Bitcoin is around $ 40,600 to $ 41,000. If this level is broken, it is very likely that the rally will continue to $ 48,000 as the price of Bitcoin will surpass the recent high of $ 42,000.
However, after such a significant rally and quick change in sentiment, a correction is very healthy, especially if Bitcoin can’t break above $ 40,800 in one go.
The views and opinions expressed here are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading movement carries risks. You should do your own research when making a decision.