- BTC/USD has been moving in a tight range recently.
- Santa’s rally may take the price to the long-term resistance line.
Bitcoin (BTC) has bee paralyzed at $7,200 since Thursday. The first digital asset attempted a recovery towards $7,600 at the beginning of the week. However, the upside momentum proved to be unsustainable as the price retreated to the lower boundary of the recent consolidation channel. At the time of writing, BTC/USD is changing hands at $7,202, mostly unchanged both on a day-to-day basis and since the beginning of Friday.
Low volatility and non-existent trading activity confined the market to tight ranges, but the situation may change ahead of the weekend. We are moving towards the holiday season, which is often characterized by low liquidity conditions. It means that the market may be vulnerable to sharp exaggerated movements. Many traders might start taking their money off the table to avoid losses.
Historically, Bitcoin tends to grow ahead of Christmas. This trend is often referred to as Santa’s rally. However, there is no guarantee that this year the history will repeat.
BTC/USD, the technical picture
If we soon out to the weekly chart, we can clearly see that BTC/USD is moving within the downside channel. In October, the similar consolidation pattern of three doji candles ended in a strong recovery, though the trend remained unbroken. This time we may see similar momentum with the price recovering towards $9,000-$9,100 during the pre-Christmas week. This movement will qualify for Santa’s rally. However, we will need to see a sustainable move above $9,150 (the sloping trendline) for the recovery to gain traction in the long run and put thee current bearish trend at risk.
On the downside, once $7,000 is broken, the sell-off may be extended towards $6,550. This support area is created by a combination of the lower line of the weekly Bollinger Band and the lowest level of the previous week. We will need to see a sustainable move below this handle for the downside to gain traction with the next focus on psychological $6,000 and $5,000 (SMA200 weekly).
BTC/USD, the weekly chart