- Analyst identifies EMA50 as a crucial support for Bitcoin, currently 2% below its market price on the weekly chart.
- A descending broadening wedge pattern suggests a potential breakout, with key support levels shaping Bitcoin’s next move.
- Bitcoin’s funding rate is in negative regions, hinting at a possible price reversal if shorts start unwinding their positions.
Bitcoin is approaching vital support levels that could offer potential entry points for traders, according to DrProfitCrypto, a crypto analyst on X. The current price action of Bitcoin is unfolding within a descending broadening wedge pattern, which is often associated with an impending breakout. As market participants debate the next move, the analyst points to key support zones that may determine Bitcoin’s direction in the near future.
EMA50 Support Zone and Market Sentiment
DrProfitCrypto has identified the 50-week exponential moving average (EMA50) as a critical support level for Bitcoin. This moving average, represented by a white line on the weekly chart, is currently positioned 2% below Bitcoin’s market price.
Historically, Bitcoin’s price action has closely interacted with this EMA50 level, acting as a dynamic support or resistance. The analyst has placed long and spot orders around this level, noting they have yielded positive returns so far.
However, the analyst also emphasizes that the broader market sentiment is characterized by fear rather than greed, which could influence Bitcoin’s next move. Unlike previous times when the market was filled with optimism, current conditions suggest caution.
He advises that patience is needed as Bitcoin continues to move sideways within the broader range. The analyst warns against waiting for a lower price, pointing to past instances where similar expectations led to missed opportunities.
Potential Lower Target Zone
Below the EMA50, DrProfitCrypto highlights another support level tied to the descending broadening wedge pattern. This formation, identified on the chart with green trendlines, shows Bitcoin trading within a widening range with declining resistance and support levels.
The lower boundary of this wedge is marked as a crucial zone, suggesting that a breach of the EMA50 could lead to further downside movement. If this lower level is tested, the price could dip into the $48,000–$50,000 range.
The funding rate is in negative regions, indicating that more short positions are open compared to long ones. This imbalance could provide more fuel for a potential reversal if these shorts start to unwind. This scenario similars the market dynamics of 2022 when many anticipated a drop to $10,000 that never materialized.
Market Dynamics and Strategic Positions
DrProfitCrypto suggests that traders should consider their risk tolerance, especially with the possibility of a 10% fluctuation from the current price level. He mentions that his strategy accounts for this potential volatility, particularly for leveraged trades.
He remains prepared to place additional long orders in the yellow-marked zone below the EMA50 if the market dips to that level, which he believes could serve as a liquidity grab and a test of the lower wedge boundary.
The analyst also notes that the real parabolic move for Bitcoin typically occurs 10-12 months after a halving event. With the last halving taking place in April, the current sideways movement could be a precursor to a more major move ahead.
As Bitcoin trades within the old all-time high region, market participants face a choice between waiting for lower prices or positioning for a potential breakout.
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
