Last weekend was incredibly rough for most cryptocurrency investors as massive sell-offs occurred. The price of Bitcoin (BTC) dipped below $10K several times but seems to have found short-term support at this level.
The primary question for the markets is whether a relief rally is around the corner or further downside movement is expected.
Let’s take a look at the charts to determine what might happen next.
Crypto market daily performance snapshot. Source: Coin360
Bitcoin clings to $10K as a psychological support level
BTC/USDT 1-day chart. Source: TradingView
The psychological barrier at $10,000 is currently acting as support, indicating a short-term relief bounce could be on the horizon. A clear breakdown of the $11,200 area triggered a massive sell-off across the markets.
This drop led toward the primary support levels around the CME gap, where $10,000 is a significant support level as well as $9,600.
As the recent market movements were volatile, multiple CME gaps can be seen on the daily chart.
BTC/USD CME 1-day chart. Source: TradingView
The daily chart of the CME futures on Bitcoin is now showing two CME gaps. The obvious one, between $9,650-$9,950, is still unfilled.
However, as the markets have been volatile during the weekend, a new CME gap was created above the current price. This one is between $10,450-$10,600 and will likely also be filled in the near term.
These Bitcoin futures gaps are significant because the majority of the traders are looking at them as an indicator. Since many traders eye these levels, these gaps tend to get filled most of the time.
As such, they are an additional tool to define support and resistance levels, though they shouldn’t be used as the only factor when trading.
Lower timeframe charts hint at double-bottom
BTC/USDT 2-hour chart. Source: TradingView
A potential trend reversal is on the horizon, though BTC/USD still appears to be on shaky ground. The blue box indicates a new lower low, which was needed to confirm a…