The monthly candle of Bitcoin (BTC) for October has closed above $13,000 for the first time since December 2017. It comes after both daily and weekly candles all closed above the crucial resistance level.
Traders often use the monthly log chart to evaluate the long-term and macro trend of an asset. On a monthly chart, each candle represents a whole month of trading activity. As such, a Bitcoin monthly log chart typically covers many years of trading activity.
The monthly chart is considered to be one of the main high time frame charts alongside the weekly chart. A clear breakout above an important level, like $13,000, on the monthly chart, indicates a technical breakout.
$13,000 breakout means $20,000 is near
As Cointelegraph previously reported, Ark Invest’s Cathie Wood emphasized the importance of the $13,000 level.
Wood, who manages $11 billion in assets under management at Ark Invest, said there is little resistance between $13,000 and $20,000. This means if Bitcoin breaks out on a high time frame chart, the probability to rise to a new record-high could get higher. She said:
“That $13,000 [level] is important because if we were to get through that, then in technical terms, there would be very little resistance and we would probably be on our way back to the peaks we saw in late 2017 — so, around $20,000. Now, we’re not sure if that is going to happen. We could stay in a new trading range, just at a little bit of a higher level than the recent six to 10. Maybe we’re in the $10,000 to $13,000 range. Nonetheless, a breakout.”
Although the price of Bitcoin hit $20,000 in 2017 and $13,970 in 2019, the monthly candle never closed above $13,000. This is because BTC saw sharp rejections during both peaks, which then rattled the market.
The recent rally is particularly optimistic because it has shown a more sustainable staircase-like uptrend. As the price rose, it established clear support levels, making the rally more stable.
What do traders expect in the near term?
In the immediate future, traders are readying for a minor pullback. Technically, the monthly chart of Bitcoin closed significantly higher above key short-term moving averages.
A pseudonymous trader known as “Loma” said BTC would likely drop to around $13,100, and resume the rally. The 5-day moving average on the Bitcoin monthly chart is found at $12,256, so a drop to low $13,000s would be healthy for the rally. Loma wrote:
“The gameplan is we’re going to nuke $BTC to $12.9-13.1k, which is just enough for shorts to pile on expecting $12-12.4k retest, then we use them as nuclear fuel to drop the biggest bearnuka candle upwards leaving shorts in Liquidation Land.”
Similarly, Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said a drop to sub-$12,000 could also occur.
As Cointelegraph reported, a Bitcoin pullback entering November would place even more pressure on the altcoin market. Bitcoin has sucked most of the volume from the cryptocurrency market, which means that if BTC goes down, the selling pressure on altcoins would likely intensify.