Bitcoin (BTC) risks breaking the January trend line today at $22,150.
It’s holding below it on the 4-hour chart, but a daily close would begin to solidify the breakdown.
However, BTC has looked relatively weak all month, with the market trading below the monthly pivot at $23,130.
I mentioned the levels’ significance in the recent weekly crypto forecast.
The longer Bitcoin trades below the $23,130 monthly level, the more bearish I become.
A daily close below $22,150 today would offer bears additional fuel toward the $21,500 support level.
But if we start to see Bitcoin take out these support levels on the higher time frames, a move to $20,000 and even $18,400 starts to look more realistic.
Apart from the longer-term chart structure, which we’ll get to at the end, there’s a considerable amount of long liquidations just below $21,000 and even more below $19,000.
To put things in perspective, there’s approximately $140 billion in long liquidations between $20,800 and $21,200.
And there’s even more below that, with about $240 billion in long liquidations between $18,400 and $19,200.
These are referred to as liquidity pools and often serve as magnets for the price of Bitcoin.
So while there is still a decent chunk of short liquidations above $25,000, there are even more long liquidations below the current price, down to $18,400.
If we look at the chart below, there’s a technical justification for $18,400 too.
That level served as the range low for BTC between June and October and later flipped to resistance in December.
Bitcoin reclaimed $18,400 in January, which triggered a 37% rally.
But BTC hasn’t backfilled this area, at least not yet.
A retest of any level is never guaranteed, and this is no exception.
But we must at least respect the potential of a move to $18,400, given the relative weakness in March, the significant liquidations sub $20,000, and the chart structure below.
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Bitcoin forming a head and shoulder pattern on the daily time frame, if this pattern holds Bitcoin will sell to $18340 support zone.