Bitcoin (BTC) fell 2% in less than an hour in a sharp correction on November 2, surprising traders. Coincidentally, the Chicago Mercantile Exchange opened the bitcoin futures market with a new hiatus, highlighting sellers with $ 13,100.
Three technical reasons may have contributed to the sharp drop in Bitcoin’s price: the CME gap, strong resistance, and the Monthly Moving Average (MA).
There are currently four holes in CME Bitcoin futures
The CME Bitcoin futures market is closed on weekends and public holidays. This means that if BTC sees a lot of price action these days, there will be a gap between the CME exchanges and cryptocurrencies.
Although there is no specific theory as to why traders sought to fill the gaps in CME futures, most Bitcoin gaps have been filled in CME.
Bitcoin has seen a strong rally since October. Over the weekend, bitcoin volumes tend to decline as the market becomes less active. But in recent months, BTC has continuously moved without volume dropping.
As a result, this resulted in the formation of four CME holes in a row. Each weekly light in the past month has created a new hiatus in CME, which is rare for Bitcoin. This means that BTC has moved very quickly even on the weekends as subsequent holes have formed.
The gap is $ 13,100, $ 12,970, $ 11,505, and $ 11,100. These areas can be thought of as vendor interest levels. Incidentally, the range of $ 12,970 to $ 13,100 is a significant moving average.
The next short-term moving average bitcoin is below $ 12,500.
On the monthly Bitcoin chart, the next short-term moving average is the 5-day moving average of $ 12,203. Throughout history, even during the beef markets, at least one short-term moving average was hit on the monthly chart before continuing to rally.
Bitcoin has risen rapidly since the start of October, rising by more than 25% from $ 11,775 to $ 13,500. The speed of the uptrend means that Bitcoin has failed to identify clear support levels on the higher timeframe charts.
Over the past two months, Bitcoin has repeated a rallying pattern followed by a brief period of consolidation. On the daily chart, this created clear levels of support and resistance, making the rally more resilient compared to the previous one.
However, Bitcoin remains far from the short-term moving averages noted on the weekly and monthly charts. The closest moving average is the 5-day moving average of $ 12,200.
Bitcoin BTC breaks a major resistance level
Bitcoin tested the $ 14,000 resistance level on October 31 for the first time since December 2017. After such a massive rally and a major test, a sharp pullback was expected.
Some traders said they were extremely surprised when the bitcoin price fell. But when they saw significant open interest in the futures market, traders said the proposal made more sense.
“Sometimes I’m really surprised by the move,” said a trader under a pseudonym known as CL. CL later added that the open interest was high enough to warrant such a move. “In fact, nvm, I miss reading how open interest has grown in the past, it makes sense.”