Bitcoin prices have been trading in a flat between $116,000 and $121,000 for the third consecutive week. A pennant pattern has formed on the daily chart, and a breakout from this range could signal renewed upward momentum. However, most technical indicators remain neutral, aside from the MACD, which showed a sell signal last week. If Bitcoin fails to hold the $116,000 support level in the near future, a decline toward $112,000 is likely.
There are two reasons why the $112,000 level might be interesting for investors. First of all, it marked the BTCUSD pair’s historical high prior to July. Besides that, the 50-day moving average (EMA50) is located nearby. Except for a false breakdown in June, Bitcoin prices haven’t traded below the EMA50 since the end of April, when the cryptocurrency’s rally started to gain momentum.
Declining investor interest in exchange traded funds (ETFs) backed by Bitcoin also points to a potential breakdown of the $116,000–$121,000 range. Over the past week, inflows into the US Bitcoin ETFs hit the lowest level since early June of just $72 million. Traders have shifted their focus on Ethereum and other cryptocurrencies with stronger dynamics and high volatility compared to BTCUSD.
So, a full correction in Bitcoin is expected after a sharp April-July rally. The $112,000 level is consistent with the 23.6% Fibonacci retracement, supporting market intention to reach this mark. If Jerome Powell and his colleagues don’t hint at monetary policy easing at tomorrow’s Fed meeting, the lower boundary of the BTCUSD flat at $116,000 could be broken down. However, it is recommended not to delay fixing profits on short positions, as the medium- and long-term trend in the cryptocurrency market remains bullish.
Here’s a possible trading option:
Sell BTCUSD near the level of 116,000. Take profit: 112,000. Stop loss: 121,000.
This content is for informational purposes only and is not intended to be investing advice.
