BTC is trading at of $107,144 on the daily chart. It demonstrates a very visible, hard horizontal cut off between $103,600 and $109,300. Bitcoin has held onto this range for almost two months now. Traders and investors are waiting on pins and needles for a solid breakthrough. Bitcoin is in the process of forming an enormous IHS pattern. This constellation of change has been forming over the past four years. The neckline of this pattern corresponds to the current resistance just under $112,000. Update, December 11, 2021—This level has proven to be an important pivot point for the cryptocurrency.

The digital asset has shown resilience, reclaiming all three major moving averages: the 50-day ($105,800), 100-day ($96,784), and 200-day ($96,136) Simple Moving Averages (SMAs). The technical indicators suggest a developing bullish trend. Despite all of the bullish news, Bitcoin remains stuck in a tight range between $100,000 and $110,000. With Bitcoin nearing the $109,300 level of resistance, heavy selling pressure arises, forming a ceiling that has proven too high for bulls to overcome time and time again. Even in the face of such daunting challenges, bullish sentiment is seeping in with alarming speed, inspired by price action of late and technical analysis.

Technical Analysis and Key Levels

Bitcoin’s price action these past few months has largely been one of tight or loose consolidation, depending on how broad your definition of a range is. Bitcoin recently bounced several times around the $103,600 and $109,300 thresholds. This horizontal structure is serving as crypto’s proverbial glass ceiling and basement. This period of consolidation has given the cryptocurrency to build a solid base, forming the potential groundwork for an explosive breakout.

That alone makes the developing formation of a huge inverse head and shoulders pattern over the last four years so significant. This technical formation, usually a bullish reversal pattern, means that Bitcoin is likely preparing for a large price surge to the upside. The neckline of this pattern matches up perfectly with the current resistance right under $112,000. Surpassing this important psychological threshold is very important to establish the trend and may even set off a parabolic jump.

Bitcoin’s recent reclamation of the 50-day, 100-day and 200-day SMAs adds credence to the bullish outlook. These simple yet powerful moving averages, popular among traders and analysts, act like a dynamic support and resistance. The mere fact that BTC is currently trading above all three SMAs combined along with the previous point implies that BTC is in a very healthy uptrend right now. As of today, the 50-day SMA is located at $105,800, the 100-day SMA at $96,784 and the 200-day SMA at $96,136. These levels are now the new support, providing a buffer from any downside threat.

Market Sentiment and Momentum

The cryptocurrency market is in a state of building bullish sentiment, mainly due to how well Bitcoin has been doing recently. Bitcoin shot up more than 10% since last Sunday, a sign that investor confidence and demand are returning. Positive Momentum The bulls are on the move with strong positive momentum. They continue to meet stiff opposition whenever they attempt to move Bitcoin above the key $110,000 level. This level is seen as a strong psychological barrier, with the potential to create a huge amount of buying pressure above.

Secondly, Bitcoin’s tenacity above the level just above $105,000 is a bullish factor. This level has been a solid support zone. To be clear, it arrests all of the big pullbacks and sets the stage for even bigger subsequent advances. The $105,000 level has come under repeated test in the past several weeks. Every time, Bitcoin has returned with a V-shaped recovery borne of passionate underlying demand.

The recent reaction against the $103,600 support area was accompanied by high trading volume. This increase in volume typically verifies the strength of the move. Higher volume indicates that more traders and investors are involved in the upward movement, reinforcing the bullish case with legitimacy. This increase in volume indicates that there is substantial bullish sentiment and belief in the market. Or, it might just be the early warning sign of a big breakout to come.

Potential Breakout Scenarios

Bitcoin is now on the verge of testing a major supply wall, and clearing this barrier would open the gates for the flagship currency’s most-awaited price rally. The $109,300 level is the upper limit of the present trading range. If prices are able to break back above this level, it could be an indication that the market dynamics are shifting significantly. If Bitcoin manages to clear this resistance area, a wave of buying pressure may ensue. That positive momentum could push the price up to test the neckline of an inverse head and shoulders pattern, just under $112,000.

A huge breakout could be coming soon, it’s important to keep in mind the bullish and bearish possibilities. On the upside, if Bitcoin price fails to reclaim the $109,300 barrier, it could start a sideways move. This would likely mean a correction back down to the $103,600 support level. Traders and long-term investors would be wise to keep their eyes peeled. An imminent retest of the lower boundary of the trading range is a possibility.

If Bitcoin successfully breaks above the $112,000 neckline, I expect that breakout to trigger a parabolic move. This kind of extreme increase would catapult the price to new all-time highs. The measured move for the inverse head and shoulders pattern suggests a much higher target price. If it breaks out decisively, a tidal wave of buying pressure from institutional and retail investors alike would likely be released. This bullish picture would almost certainly be coupled with the dramatic increase in media attention on cryptocurrencies and more validation of Bitcoin as a mainstream asset.