On Monday, Bitcoin’s short-term outlook worsened after the price fell to an intra-day low at $45,672, a far cry from the weekend’s promising rally above the $50,000 level.
With the year nearly complete, and all-time highs nearly 33% away, traders are most likely readjusting their expectations and pushing the $100,000 BTC target a bit further into 2022.
Daily cryptocurrency market performance. Source: Coin360
Day traders, 4-hour chart watchers and over-leveraged longs are likely freaking out (unless they went short from $50,000 over the weekend or at this morning’s weakness), but let’s zoom out a little bit to see where Bitcoin price stands.
BTC/USDT daily chart. Source: TradingView
On the daily timeframe, we can see the price struggling to breakout away from the trend of daily lower highs and aside from the Dec. 4 drop to $42,000, traders appear apprehensive to buy into the most recent dips.
Tracking moving averages has always been a relatively simple way to swing trade BTC and currently the 20-day moving average (blue) is below the the 50-day MA (orange). Some traders simply buy when an asset secures a few daily closes above the 20-MA and sell when the price falls below it because this is a sign that the short-term trend is weakening.
Following this practice, momentum traders might wait for BTC to secure a daily close above the moving average at $53,000 before opening new long positions. More risk averse traders might consider waiting for convergence between the 20- and 50-MA as a clearer sign of a trend reversal. Taking a quick look at the last year of price action proves that the strategy is pretty effective.
Why some traders expect more downside
More experienced traders know that Bitcoin price has a tendency to make double tops, M-tops and head and shoulders patterns after hitting new all-time highs. Lately, analysts on crypto Twitter have pointed to what they perceive to be a double top, which is a clear trend reversal pattern.
BTC/USDT daily chart. Source: TradingView
Looking at the daily time frame, we can begin to see what looks like the start of a head and shoulders pattern. The current dips and…
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