Bitcoin price is showing weakness after another sharp rejection from the $11,000 resistance level. As Bitcoin (BTC) enters the fourth quarter, the sentiment around the market remains generally cautious and neutral.
Bitcoin might face a larger pullback in the fourth quarter due to several key factors. Throughout the past three years, every September monthly candle has closed red. The September monthly candle for 2020 is also on track to close as a red candle, indicating a lack of direction.
From March through August, favorable financial conditions, a low-interest-rate environment and a multitrillion-dollar stimulus package caused Bitcoin and stocks to rally in tandem. In the upcoming months, due to the United States presidential election in November, the probability of a delayed stimulus approval is increasing. The growing uncertainty around the macro landscape and the financial markets in the U.S. could pressure BTC.
Traders are generally cautious in the short term and optimistic in the medium to long term. Technical analysts have identified key price levels for BTC as $9,800, $10,700 and $11,800. As long as Bitcoin remains in between either the $9,800–$10,700 or $10,700–$11,800 ranges, low volatility is expected. As such, while traders are cautious around the near-term trend of Bitcoin, many do not foresee a large drop.
As a potential area of interest, traders are considering the $9,600 CME gap that forms when Bitcoin price rises or falls below the CME Bitcoin futures market price after it closes for weekends or holidays. The $9,600 gap has yet to be filled, and given the tendency of most CME gaps to get filled, the level remains a target.
A short-term bearish structure
The monthly candle of Bitcoin is expected to close below $11,000, which would confirm a red candle for the month of September. In technical analysis, if a new candle closes below the closure of the previous, it’s called a “bearish engulfing.”
Additionally, Bitcoin’s monthly close would come…