As Bitcoin (BTC) breaks out of key resistance levels, an analyst suggests that the cryptocurrency is positioning itself for a move to higher levels and a retest of a crucial technical area in the coming weeks.
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Bitcoin Approaching Make-Or-Break Test
On Tuesday, Bitcoin surged 2.5% to retest the $93,500 resistance level for the first time in a week. The cryptocurrency has been hovering between the $84,000 to $93,500 price range for three months and has failed to turn this level into support multiple times.
Analyst Rekt Capital recently noted that the flagship crypto is near a “historic” test as it has begun to form “another technically decisive region” just above current price levels.
The market watcher explained that BTC is approaching its dynamic Bull Market Exponential Moving Average (EMA) cluster, where the 50-week EMA and 21-week EMA are getting closer.
This key cluster, currently located between the $96,000 and $97,500 levels, has historically been tested before a “meaningful crossover,” with the Bitcoin price overextending beyond the cluster.
However, this has usually been followed by an unsuccessful confirmation of this region as support. “When that happens, the crossover itself often follows the bearish price event, rather than causing it, with the EMA cluster flipping into resistance from the underside and leading to downside continuation,” the analyst detailed.
Notably, past cycles reveal that the 50-week and 21-week EMAs can move very close together, Rekt Capital wrote, emphasizing that they can even overlap for prolonged periods before a decisive crossover.
Currently, Bitcoin has yet to retest and overextend beyond the two EMAs, but its historical performance suggests that it will likely occur. Moreover, BTC’s price is “positioning itself in a way that could allow for a springboard higher, potentially enabling a test of this cluster in the weeks ahead. The key question is timing.”
BTC Price Breaks Out Of Key Resistances
In his analysis, the market observer discussed BTC’s recent performance, which has seen a structural change despite the sideways price action. Last week, the cryptocurrency’s price closed above its multi-week downtrend, which has been serving as a major resistance point since late November.
This marks “a small but notable technical milestone” as Bitcoin now holds above the November and December highs in the weekly timeframe, treating the previous resistance as support.
In addition, the mid-zone of its local range, around the $90,500 level, is now “almost perfectly confluent with the former Downtrend, meaning the Downtrend that last week rejected price is beginning to act as layered support instead.”
Therefore, if Bitcoin continues to hold the mid-range region, the price should be able to challenge higher levels and find a path toward $100,000. Rekt Capital added that, unlike previous retests, the most recent rejection from the crucial $93,500 resistance was significantly shallower and shorter, suggesting that it was getting weaker.
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Now, the flagship crypto has successfully retested the downtrend breakout area as support and momentarily reclaimed the $93,500 resistance, surging above the $94,000 area once again.
Ultimately, BTC will need to hold this area and close the week above $93,500 to “kickstart a breakout from the Weekly Range as per previous green circles,” the analyst concluded.
As of this writing, BTC trades at $94,334, a 2.6% increase in the weekly timeframe.
Featured Image from Unsplash.com, Chart from TradingView.com
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