The price of Bitcoin (BTC) tumbled down from $9,200 to $8,450 yesterday. However, bulls are defending the $8,600 level with strength. The market needs to find a support area before the continuation of the bullish momentum is likely. Did the market find one already?

Crypto market daily performance. Source: Coin360

Bitcoin price finds resistance at $9,200

The price of Bitcoin rallied towards the $9,200 level through the past weeks, which makes it a 43% rally in just a month. However, the 0.618 - 0.65 Fibonacci level (the golden pocket ratio) provided resistance, and the price of Bitcoin dropped down yesterday.

BTC USDT 1-day chart. Source: TradingView

Similarly, the $9,200 level used to be strong support during the summer of 2019 and can, therefore, be classified as a major hurdle to take for Bitcoin. If this level breaks upwards, a healthy continuation of the bullish momentum is likely with targets of $10,000 and $11,000 on the table.

BTC USDT 4-hour chart. Source: TradingView

The 4-hour timeframe is showing a significant rejection from the $9,200 level. This rejection was created through a weak breakout of the $9,000 level, which caused the RSI to make bearish divergences and to ‘trap’ traders in this direction. Usually, a breakout causes an influx of volume, unless the breakout is a fake-out.

Additionally, the chart shows that the price is currently stabilizing around the high of January the 8th. This high is found at the $8,470 level.

Weekend movements create CME gaps

BTC USD 4-hour CME chart. Source: TradingView

Movements during the weekend create CME gaps, and CME gaps are likely to be filled soon after. Given that the dropdown occurred on Sunday, there’s a new gap created on the charts. This gap is defined between $8,765 and $8,865. Does this mean that the price is likely to move upwards? No, but the CME gaps are being used as a new indicator or narrative to trade.

Total market capitalization struggles to break $250 billion

Total market capitalization crypto 1-day chart. Source: TradingView

The total market capitalization chart shows a significant resistance at $250 billion. This resistance is compared with the $9,200 level as the total market capitalization used to have this level as support through the summer of 2019.

From this perspective, a bullish divergence marked the bottom of the capitalization chart, which caused the rally towards $250 billion. However, the chart is showing a rejection of $250 billion, which makes me believe that we’re going to see $215 billion as a retest for support.

Total market capitalization crypto 4-hour chart. Source: TradingView

The 4-hour chart is showing similarities with the Bitcoin chart. There was a harsh rejection at $247 billion, after which capitalization bounced at the support of $230 billion. If the total market capitalization can’t break through $240 billion, then this could be a bearish trap.

If we see a bearish trap, continuation downwards would be likely, aiming to get a retest of the $215 billion zones.

Keeping this information in mind, what scenarios are there for Bitcoin over the short-term?

Bullish scenario

BTC USDT bullish scenario. Source: TradingView

The momentum is still upwards, given the strong upward move in recent months. The price of Bitcoin also broke a 7-month downtrend, which means that dips are usually for buying. However, what else is needed for the price to continue moving?

Essentially, it starts with creating a higher high, and that’s a breakthrough of the $9,200 resistance area. But, to get to a higher high, the price needs to find support to start. Two key areas are defined in the chart above; $8,460 (the current support area) and $8,200 (the green zone).

If the price of Bitcoin manages to hold either $8,460 or $8,200, then continuation to the upside is likely to occur. However, such a move will usually take time, as the price first needs to define the range and accumulate.

From such an accumulation, the next impulse wave could occur, and targets from such an upwards movement are defined at $10,000 and $10,900. But first, $8,900 and $9,200 are hurdles on the way, which first need to be cleared.

Bearish scenario

BTC USDT bearish scenario. Source: TradingView

Over the short-term, a bearish scenario is more likely as the price was rejected hard at the $9,200 level. This suggests that the price of Bitcoin needs some consolidation before continuation.

However, there’s still the CME gap at $8,865 which traders will be observing. Given that there’s a CME gap, a weak upwards push towards this level is likely to occur. But, if there’s no volume coming in and no breakthrough of this level, I expect the price to drop down and test lower levels for support.

If this scenario plays out, the levels that I’m aiming for are $8,250 and mainly $7,700. Is that a bad sign for the market? Not necessarily. The market is not in a parabolic phase yet, which means that backtests and support tests are usually a sign to buy the dip. If Bitcoin wants to maintain momentum upwards, it should not drop below $7,700.

However, the price is currently moving $1,000 above this support zone. Meaning, currently there is no reason to be panicking or debating the area too much.

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.