Over the weekend numerous traders pointed out that Bitcoin (BTC) price broke its parabolic uptrend which had dated back to September. Technical analysts are bracing for a pullback as the dominant cryptocurrency eyes consolidation.
Bitcoin could still see a strong recovery after the weekly close if there is a continuation of the rally. But it would need to quickly re-enter the parabola or risk a potential downward correction.
Traders pinpoint $15,500 as the key level to maintain the bull run
Since early September, Bitcoin has continuously rallied without major corrections. Typically, during bull trends, BTC historically saw 20% to 30% drops. There is a possibility that a large pullback could ensue if BTC fails to reenter the parabola.
According to the 12-hour Bitcoin price chart shared by the pseudonymous trader “Altcoin Psycho,” BTC is now out of 2-month the parabolic advance.
The trend does not necessarily indicate that BTC would see a deep correction in the near term. Rather, it merely signifies that a trend might form as the markets cool down.
For instance, long-time technical analyst John Bollinger said that BTC is likely to pull back or consolidate. Considering that BTC is hovering at the top of the Bollinger Bands, BTC is hovering in overbought territory.
But, there is always a possibility that BTC could see a stronger rally in the near term in a different technical structure.
The break of the parabolic uptrend simply signifies that a new market structure would emerge. Whether this means a downtrend would emerge or a broader rally would occur remains to be seen.
In the foreseeable future, Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said $15,500 holds the key. He said that if BTC drops below it, a large correction is possible. He wrote:
“The market in general is at crossroads of direction. Breaking below $15,500 and I assume we'll see a correction across markets with $BTC to possibly $13,000 or lower.”
Technical analysts are generally cautious in predicting a clear short-term direction due to the uncertainty in the market. There are strong chances that BTC could either continuously surge upwards or see a major price drop.
If Bitcoin drops below $15,500, however, it would mean that the probability of BTC testing low support levels is high.
On the weekly chart, the two key short-term moving averages (MAs) are found at $13,967 and $12,390. Although the weekly chart does not have to retrace to MAs, in previous bull cycles, there were instances where the weekly chart retested lower MAs.
The variable is whales selling BTC
Since Nov. 10, Gemini exchange recorded unusually high deposits. This typically indicates that whales are moving to sell their holdings to take profits.
A pseudonymous analyst known as “Blackbeard” said an unusually high amount of $BTC has been transferred to Gemini wallets” on Nov. 10, referring to CryptoQuant’s on-chain data.
On Nov. 15, as Cointelegraph reported, Gemini deposits spiked again, which might lead to higher selling pressure in the near term.
In the foreseeable future, if BTC struggles to recover, the selling pressure from whales and miners would remain as important variables.