Bitcoin’s horizontal levels show potential for an uptrend

After regaining its bullish momentum, the largest cryptocurrency on the market, Bitcoin (BTC), briefly broke its key resistance level of $28,700. However, the cryptocurrency retreated and returned to trading within its $27,600-$28,500 range formed over the past week.

Despite this turbulent price action, a new blog post by Justin Bennett, crypto market trader and analyst, suggests that BTC has established “strong” horizontal levels that are favorable for both scalpers and investors who prefer this period of range or consolidation in the market.

Will these horizontal levels imply a potential drop in BTC price?

Bennett goes on to mention that Bitcoin is trading above the $28,130 pivot point on an hourly and 4-hour close basis. Any attempt to retest this level is likely to attract sellers and potentially trigger another run to the $27,650 support floor and possibly lower prices.

The Horizontal Planes of Bitcoin. Source: Justin Bennett Blog

Although the horizontal levels seen on the chart may present opportunities to scalp, Bennett warns that there is potential downside risk if BTC’s support levels are breached.

Bennett suggests that while BTC’s price has no confirmed direction, there are currently more long liquidations below the price than short liquidations above it. This means that a larger number of traders have entered long positions and may be liquidated if the price falls further over the weekend.

Bitcoin Liquidation Heatmap. Source: Justin Bennett Blog

However, with Bitcoin trading above the key pivot point, there is still potential for further upside and consolidation above the $29,000 level. The $28,900 macro resistance level is the next target for BTC, and a successful break could result in further gains for the largest cryptocurrency on the market.

Bennett further suggests that the primary range for Bitcoin is between the $26,500 support and the $28,900 resistance wall, with smaller ranges within that range. This can mean that price action can be relatively stable within this range. Still, there is potential for significant volatility if the price breaks out of this range and corrects towards the support level.

A new cycle is just beginning for Bitcoin

With the conclusion of the first quarter for Bitcoin and the broader cryptocurrency market, BTC is on the verge of confirming its first bullish quarterly engulfing candle since early 2020, according to Rekt Capital. This pattern occurs when the opening price of a given quarter is lower than the closing price of the previous quarter.

According to Rekt, this pattern has historically preceded multiple quarters of gains for Bitcoin, meaning BTC’s price tends to rise multiple quarters after the pattern is confirmed, like in the 2021 bull market.

Bitcoin devouring candles. Source: Rekt Capital on Twitter.

Even if Bitcoin’s price experiences a short-term pullback, sentiment in the cryptocurrency market seems to be headed towards one thing: BTC is poised for a new bull run.

The market is expected to experience a sustained period of price increases in the coming months, with the first quarter set to close above key levels. This indicates strong growth potential and investor confidence despite short-term fluctuations in Bitcoin’s price action.

Bitcoin is trading sideways on a 1-day chart. Source: BTCUSDT on TradingView.com

Featured image from Unsplash, chart from TradingView.com

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