Bitcoin has remained around the critical support for more than two weeks despite all the fear and doubt in the market. It appears that investors are partially sitting on the sidelines in an attempt to find a directional change.
The Daily Chart
The critical demand zone of $28.6K – $28.8K (in green) has been acting as a strong support range since January 2021. Additionally, the price is accompanied by a falling wedge (in yellow), which is frequently considered a bullish pattern.
When prices experience a sideways trend, supply and demand are usually close to being at a state of equilibrium. Typically, this pattern appears during a consolidation prior to a significant movement.
Meanwhile, if the bears try to push the price below the green support level, the wedge bottom ($25K-$28K range, marked with a blue rectangle) will act as a strong support level. On the other hand, if the bulls manage to recover from the range, the first obstacle would be the $30K resistance, followed by a long-term target set at $37K.
Key Support Levels: $28K & $25K
Key Resistance Levels: $34K & $37K
The 4-Hour Chart
The chopping market structure on the 4-hour chart is evident. Within a horizontal rectangle (in blue), the price fluctuates between $30.8K (resistance) and $28.6K (support). Suppose the price keeps moving within this rectangle in the short term. In that case, it is difficult to determine the direction of the trend with a high degree of confidence.
Therefore, it’s imperative to wait for any sort of confirmation regarding a potential direction.
The Whale Ratio is a crucial indicator for anticipating short-term volatility. This metric is the ratio of the top 10 exchange inflows to the total inflows of the exchanges. The graph provides a reasonable estimation of whether whales or retailers deposit their coins into exchanges. High values in this indicator trigger a bearish sign, suggesting that the whales are the likely cause of selling pressure, resulting in a short-term price drop.
For better visual understanding and a smoother chart, the 14-day EMA was added to the data. Over the last few months, values above 0.48 have taken place before price declines, as seen in the figure below. The metric has recently surged, causing a massive market shakeout, and then calmed down. However, the indicator is climbing again during the recent consolidation, which might trigger another bearish trend for Bitcoin.