BTC Correction Incoming? Key Support Zones to Monitor

10 Jan

Over the past 50+ days, Bitcoin has been consolidating within a well-defined range, with the all-time high (ATH) at 108K marking the upper boundary and 90K as the lower boundary. The current price action has formed a Head and Shoulders pattern, with the neckline positioned around 90K.

Volume and Recent Price Action

• Volume has notably decreased compared to the elevated levels seen in November and December 2024, signaling weakening momentum.
  

• Price rose significantly to 102.7K, reaching the 0.666 Fibonacci retracement level of the current downtrend, where it faced a sharp rejection. This rejection led Bitcoin to test the lows around 91.5K.
  

Key Resistance Levels

• 97K (POC): The Point of Control (POC) of the current range sits around 97K, which also aligns with the anchored VWAP taken from the all-time high.
  

• 98.3K (Fib 0.618): The Weekly Open (wOpen) coincides with the 0.618 Fibonacci retracement of the current downward wave, making it a significant resistance level.
  

• 100K (Psychological Level): A critical psychological barrier, also serving as a key level for setting stop-loss orders for short positions.
  

Short Trade Setup
A short position could be built in the range of 97K-98.3K, with the following parameters:

• Stop-Loss: Above 100K.
  

• Target: 84-80K range.
  

• Risk-to-Reward Ratio (R:R): A favorable 3:1 to 4:1, depending on laddered entries.
  

Key Support Levels and Confluence Zone (80K-83K Region)
The 80K-83K region stands out as a strong support zone due to multiple confluence factors:

1.) Fib Retracement Levels:

• 0.618 (82.7K): From the swing low of 67K to the ATH of 108K.
  

• 0.5 (80.45K): From the broader wave structure (52.5K to 108.35K).
  

• Negative Fib -0.618 (81.1K): From the current downward wave.
  

2.) Anchored VWAP: Anchored from 6th September 2024, currently aligning with the 82K level.
3.) ]Fib Speed Fan (0.618): Taken from the low at 52.5K to the ATH, intersecting with the 80-82K region around mid-to-late January.

Long Trade Setup
The 80K-83K support zone presents a strong opportunity for a long position for those who missed the previous uptrend:

• Entry Zone: Between 80K and 83K.
  

• Stop-Loss: Below 78K or lower.
  

• Target: 90K, which aligns with the neckline of the Head and Shoulders pattern.
  
• Risk-to-Reward Ratio (R:R): Approximately 2:1 if entering from the 80K level.
  

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