The leading crypto asset by market, Bitcoin, may have taken the first major step in staging a short-term reversal yesterday, after a successful $1,000 push from bulls put a stop to the continued downtrend.
However, according to a prominent cryptocurrency analyst, Bitcoin is not yet “out of the woods” and must first clear five additional levels of key resistance before there’s any chance of continuation and further reversal.
Bitcoin Price Must Breach Five Resistance Levels Before Rally Becomes Reversal
Yesterday morning, Bitcoin plunged to $6,450 in a sweep of local lows, then over the next few hours made a powerful rebound all the way to $7,400 before cooling off and experiencing a minor pullback to $7,050. The $1,000 positive gain turned even the most bearish investors suddenly bullish, but a well-known trader and crypto analyst says that bulls shouldn’t be celebrating at all just yet.
Related Reading | Bitcoin Surges to $7,200 By 11% In Massive 1 Day Reversal, As Traders Consider Bottom
Crypto analyst FilbFilb claims that Bitcoin price action is not yet “out of the woods” and must first reclaim five important levels of overhead resistance before bulls can realistically breathe a sigh of relief that the downtrend may be finished.
Nice $btc pump yesterday but PA is miles from out of the woods. Lets talk bull when these have been cleared:
– POC Resistane
– Diag Resistance
– Multi Week Resistance
– Monthly Open Resistance
– Weekly Open Resistance pic.twitter.com/7JgS3M9xw2— filbfilb (@filbfilb) December 19, 2019
The critical resistance levels include point-of control resistance, located at $7,200, which BTC is currently below; weekly open resistance, which it’s struggling to stay above currently; multi-week and monthly open resistance, residing at around $7,600; and diagonal resistance forming a trendline strung across the crypto asset’s most recent local tops.
How Bitcoin price reacts with these levels will be telling as to if the cryptocurrency is staging a reversal here, or if it’s yet another short-lived rally before more downside.
If Resistance Is Cleared, Where Will the Crypto Asset Go Next?
If Bitcoin can clear these important resistance levels, the first-ever cryptocurrency should then move on to target $8,000 and above. If Bitcoin can reclaim these levels and hold them on the weekly and monthly price charts, the downtrend could indeed be over, and Bitcoin could return to the bull market most believed it had been ramping up into.
However, if Bitcoin price cannot breach these resistance levels, the recent pump could be yet another bearish retest, putting the crypto asset is at risk of falling deeper into the downtrend and setting a new local low. As of now, Bitcoin’s bear market low rests at $3,100, and the most recent local low sits at $6,450.
Related Reading | Goldbug Peter Schiff Calls For Bitcoin To Close 2019 at A Loss
Any break below $6,450 will put lows in the $5,000 and $4,000 range on the table, and if those levels fail, Bitcoin’s current bear market bottom may not hold a second time, causing the entire crypto market to collapse and the first true bear market to begin.