Bitcoin Support Retest Primes Bulls For Next Attempt At $80K

Bitcoin bulls fell $515 short of their $80,000 target after BTC (BTC) topped out at $79,485 on Monday, but a potential upside is that the brief pullback provides a necessary retest of key underlying levels. 

In technical analysis, a break of structure is generally followed by a support-resistance retest as swing traders take profits at preset levels that align with metrics such as the Fibonacci retracement, exponential moving averages, Bollinger Bands, order book structure, and more. The support-resistance flip is also a feature traders look for to confirm that a longer-term resistance (in this case) has turned into support. When confirmed, it gives some traders the confidence to open new positions at the S/R level as they believe the break of structure and retest marks either the completion or the start of a trend reversal. 

After managing the first decisive breakout from the three-month-old channel, Bitcoin retested the channel resistance (at $76,688) that had pinned down every BTC rally since Feb. 8. A deeper retest could see the price drop to the 20-day moving average at $75,250, and then confirmation of the S/R flip would entail daily candle closes above the former trendline resistance. 

BTC/USDT 1-day chart. Source: TradingView

Outside of the naked price action from the candlestick chart, the long-to-short delta (heatmap below) shows longs currently with the advantage, with a -$38.6 million delta, and the figure widens to -$153 million if BTC rises to $77,500. 

BTC/USD long-short delta. Source: Hyblock

Essentially, the SR flip from the Monday US morning session liquidated long positions down to $76,500, potentially confirming the trendline resistance as support. As the price rebounds, the chart shows shorts having significantly more leveraged exposure at risk.

Related: Bitcoin shorts create $1.4B liquidation risk: Is a price squeeze to $80K next?

Bulls may succeed in pushing the price through the most immediate overhead shorts and returning BTC to its range highs below $80,000, but the aggregate orderbook set at 2.5% to 5% shows a wall of asks stacked from $79,700 to $80,000. This suggests that clearing the $80,000 level could remain a challenge in the short-term.

BTC/USDT orderbook bids and asks. Source: TRDR.io

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