The price of Bitcoin (BTC) retraced to $5,800 over the weekend, which left the markets with an open CME gap between $5,900 and $6,620. Aside from that, buyers have stepped in at the $5,850 level, leading to a $600 rise in the price on Monday. However, is the correction over or is the market range-bound?

Crypto market daily performance. Source: Coin360

Bitcoin finds support at the $5,850 level

The bearish scenario was shown through thee movements in our previous article, which stated that support levels at $5,800 were significant levels to watch.

BTC–USD 2-hour chart. Source: TradingView

The support area (i.e., the blue zone) around $5,800 was the first level for traders to watch and was hit during the weekend. Buyers stepped in alongside a smaller time frame bullish divergence, indicating that a short-term trend reversal was on the horizon.

However, is that an indication of further upward movements to occur? No. The market is still moving below a significant resistance level at $6,800–$6,900, which is crucial to break to become bullish.

Given that the price of Bitcoin moved significantly during the weekend, the markets appeared to open up on the CME futures on Sunday with a gap, as the next chart shows.

BTC–USD CME 6-hour chart. Source: TradingView

The CME chart clearly shows the existence of multiple gaps that are used as an additional narrative for traders. The CME futures opened $600 lower, leaving a gap until $6,620, which is close to being filled by the current price movements of Bitcoin.

Alongside this CME gap, the chart also shows multiple other gaps: one at $3,570, one between $8,300 and $9,000, and one at $11,600.

Combining the CME information with the price movements of Bitcoin, one conclusion can be drawn from this recent price action.

Bitcoin remains bearish until $6,900 breaks

BTC–USD 1-day chart. Source: TradingView

The price of Bitcoin is still in a bearish momentum until the price can reclaim its previous support at $6,800–$6,900. However, such a move hasn't occurred in the past week, which doesn’t open up for bullish thoughts.

By analyzing the daily timeframe, one can see that the price is range-bound between several levels. The support area is found between $5,800–$5,900 and $5,600, while the resistance areas are found at $6,350–$6,400 and $6,525–$6,575. No clear breakthrough means no clear direction of the market.

BTC–USD 4-hour chart. Source: TradingView

The four-hour chart shows a similar view. The price of Bitcoin maintained above $6,600 for almost a week, after which $6,900 was firmly rejected.

Losing the $6,600 support was a bearish indication, which resulted in the price of Bitcoin dropping to the next support level at $5,800. A clear bearish retest and rejection at $6,550–$6,600 would confirm the downward momentum and would also close the CME gap, as discussed previously.

The total market capitalization of crypto needs to break $185 billion

Total cryptocurrency market cap 1-week chart. Source: TradingView

The total market cap shows a clearer picture. The market cap of crypto lost a vital support level at $185 billion, which held support during the last part of 2019 and is currently being tested for resistance.

The significance of this level is also found on the left side of the chart. The $185 billion support zone held during 2018. Therefore, losing this level is an apparent bearish sign, and a clear breakthrough upward would be needed to get a bullish outlook on the markets.

Rejection at this level would indicate further downward momentum toward a market cap of $105 billion to $110 billion, while a breakthrough of $185 billion could indicate further upward momentum toward $240 billion to $250 billion.

The bullish scenario for Bitcoin

BTC–USD 2-hour bullish scenario chart. Source: TradingView

The bullish scenario is straightforward. The structure has to make a higher low in the coming days, through which the $6,050–$6,100 level needs to become supported.

The next step would be to reclaim the previous support at $6,600, which is a crucial level to break. If the price of Bitcoin can’t reclaim this level for support, further downward momentum is warranted and the bearish scenario is applied.

However, an apparent breakthrough at this level would indicate strength. Likely levels after such a move are the $7,100–$7,200 and $7,500 areas, as it’s to be expected that the price of Bitcoin would reach a new high above $6,900 after reclaiming $6,600.

The bearish scenario for Bitcoin

BTC–USD 2-hour bearish scenario chart. Source: TradingView

As stated earlier, the bull/bear scenarios pivot around the $6,600 area. The moment that the $6,600 area is rejected and the CME gap is closed, further downward pressure is expected to occur.

However, such a move can take some time. The equity markets and cryptomarkets have shown a significant positive correlation recently, as both markets crashed and bounced heavily.

After these movements, volatility ends as the dust settles and new structures have to be established. Therefore, range-bound movements are likely to be played out in the cryptocurrency market as well.

But a rejection at the $6,600 area would indicate further downward momentum and a lower high to be made on the chart. The levels to watch next for support are $5,700–$5,800 and $5,250–$5,400. If the price of Bitcoin drops below $5,250, a further deep drop toward $4,000 can be expected to occur.

However, everyone hopes and would like to see Bitcoin break above $6,900, as then the conclusion can be drawn that the price confirmed a V-shape bottom formation.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.