After hitting a low of below $100,000 during the weekend, the Bitcoin price saw a 10% bounce, reclaiming $106,000 again. This was a welcome development as it provided some relief for altcoins, which have suffered major declines in their prices. However, it seems this move up will only be short-lived with the appearance of a double-top and fair value gaps (FVGs) looking to be filled close to the weekend lows.
Bitcoin Completes Liquidity Sweep To Form A Double Top
After the Bitcoin price moved above $106,000, crypto analyst Louigi pointed out that the digital asset might have formed a double top, something that is bearish for the cryptocurrency. This comes as there was a completion of a Buy Side Liquidity Sweet as the market determined its new direction.
Following the turn in the direction, there have been signs of buyer exhaustion as the price had initially stalled. This suggests that there was a decline in the bullish momentum, and this had begun with $106,600 as the key resistance area, and a rejection was expected.
After the sharp move upward, the crypto analyst said that Bitcoin had left gaps between buyers and sellers, which are usually referred to as Fair Value Gaps (FVGs). These are areas that the price tends to fall back to in a bid to regain balance, and they are often filled in quick succession.
In this case, there are multiple fair value gaps, going all the way toward $102,000. The first is the region below the $105,000 level, which is also the 0.28 Fibonacci retracement level and the first line for reaction, according to the analyst. A fall to this level without support, Louigi explains, would cause the price to shift toward the second gap at the 0.5-0.618 Fib level below $104,000.
Last but not least on the lineup is the 0.618-0.65 Fib levels at $102,000, which is a critical junction for Bitcoin. If this level fails to hold, then a retracement to the 0.786 Fib level becomes likely, and this lies just above the $101,000 price point.
Why This Thesis Could Be Invalidated
According to the crypto analyst, the Bitcoin price had formed a double top at $106,600, which meant that it had peaked at the time. However, Bitcoin has managed to surge beyond that point, even reaching as high as $108,000 before being rejected back downward.
With the price recovery, it could suggest that the FVGs below $106,000 could remain unfilled as Bitcoin campaigns for new all-time highs. With less than a 10% move from a new all-time high, it is likely that bulls could dominate into the third quarter of the year.
Featured image from Dall.E, chart from TradingView.com
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