In recent weeks, altcoins gained momentum as Bitcoin (BTC) hovered around the $12,000 psychological barrier. After a few weeks of consolidation, Bitcoin’s price finally broke through the $12,000 resistance zone.
However, it’s not clear if the price will continue to climb to $15,000 from here. Is the upward movement a clear breakout or a trap aimed at gaining overall liquidity?
The $12,000 barrier failed to drive a stronger rally
As the price of Bitcoin broke the crucial resistance at $12,000, a massive movement was expected to occur. However, the market could not provide one.
The daily chart shows a definite breakthrough of the final barrier before the bullish market expands. However, the move above $12,000 is not compelling enough to affirm and confirm the breakout.
One of the critical indicators of a breakout is the volume increase, which is lagging far behind this recent momentum.
The good news is that Bitcoin Cycle continues to perform above the 100-day and 200-day moving averages, which supports the current bullish momentum.
An apparent gain from this level, through which support is given at $12,000, would justify and confirm further upward momentum in Bitcoin.
Bitcoin price reaches 13-month high at $12,200, settling $22 million in short contracts
Breakages can cause traps
Very often, a breakup like this leads to a trap. A trap is justified by a similar move. In such a related move, liquidity is taken above recent highs or resistance.
Usually, when someone is in a short position, he places his stop-loss above the recent high. This gives a very obvious „liquidity pool“ as all obvious stop-losses are placed above this high of resistance.
Therefore, a move slightly above the recent high can trigger all those actions, feeding a move in the opposite direction, as the chart shows as an example.
The crucial barrier remains to be seen with the $12,000 level. If that level does not provide support, a similar move towards the lows in the range is likely to occur.