Bitcoin price is currently in a critical zone, and its reaction in the next few days will likely determine the market direction in the coming weeks.
The price recently crossed the $27,500 resistance level on the daily time frame after breaking above the 50-day moving average around the $26,000 mark. However, the price was rejected by the 200-day moving average near the $28,000 level, which led to a pullback to the broken $27,500 level.
If this level holds and the market rises above the 200-day EMA, a rally towards $30,000 and beyond becomes very likely. However, failure to do so could lead to a potential breakdown towards the $20,000 support area.
Examining the 4-hour chart provides more clarity on the recent price action. Since breaking out of the large falling wedge pattern, the price has risen above the $27,500 resistance level.
However, it is currently retesting this level, and if the pullback is valid, the market could be poised to rise towards $30,000. Conversely, if the pullback fails, the recent move will be considered a false breakout and could lead to a rapid decline towards $25,000 or less.
The trader’s buying and selling ratio
The futures market has played an important role in determining Bitcoin’s price movement in recent years. Therefore, for a sustainable uptrend to occur again, the futures market must be prepared.
This chart displays the 100-day moving average of Bitcoin’s buy/sell ratio, which is a valuable measure in assessing sentiment in the futures market. This measure indicates whether buyers or sellers execute more aggressive orders overall. Values above one are considered bullish, while values below 1 are considered bearish.
As shown in the chart, the buy/sell ratio has been below 1 for some time now, coinciding with the recent consolidation and inability of the price to move higher. If this measure starts to rise and exceeds 1, a bullish continuation is expected in the short term. Otherwise any upward movement is likely to be unsustainable.
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Cryptocurrency charts By TradingView.