The Bitcoin price fell by 2 percent within an hour and traders did not expect it. 3 reasons for the decline.
The Bitcoin (BTC) price fell 2 percent in less than an hour on November 2. Traders were surprised by this. The CME Profit Revolution futures market opened with a new gap, making $13,100 an interesting area for sellers.
Three technical reasons contributed to Bitcoin’s abrupt price decline. CME gap, important resistance and monthly moving averages (MAs).
There are now four CME Bitcoin futures gaps
CME’s Bitcoin Futures market is closed on weekends and holidays. This means that if the BTC rises or falls sharply during these days, a gap between the CME and crypto currency exchanges is created.
While there is no comprehensive theory of why traders fill CME futures gaps, historically most CME Bitcoin gaps have been filled.
Since October, Bitcoin has experienced a strong rally. Over the weekend, BTC volumes tend to decline and the market becomes less active. However, in recent months, BTC has been growing steadily without a decrease in volume.
Consequently, this has led to four CME gaps in a row. Each weekly candle in the past month resulted in a new CME gap, which is rare for Bitcoin. This means that BTC also moved so fast on weekends that new consecutive gaps were created.
Bitcoin CME gaps on price chart.
The gaps are $13,100, $12,970, $11,505 and $11,100. These areas could be of interest to sellers. The range between $12,970 and $13,100 is an important area in terms of moving averages.
The next short-term monthly moving average for Bitcoin is below $12,500
On the Bitcoin monthly chart, the next short-term moving average is the 5-day moving average at $12,203. Throughout history, even during bull phases, at least one short-term moving average on the monthly chart has been reached before the continuation of a rally.
Bitcoin has recovered rapidly since early October, rising by more than 25 percent from $11,775 to $13,500. The pace of the rise meant that BTC was unable to establish clear support levels over the longer term.
Over the past two months, Bitcoin has repeated the rally pattern, followed by a brief period of consolidation. On the daily chart, this provided clear support and resistance levels and made the rally sustainable compared to previous ones.
On the weekly and monthly charts, however, Bitcoin is still far from remarkable short-term moving averages. The closest MA is the 5-day MA at around $ 12,200.
BTC has offered a lot of resistance
Bitcoin tested resistance at $14,000 on October 31 for the first time since December 2017. After such a major rally and an important retest, a sharp drop was expected.