Bitcoin's ABC pattern: Buyers and sellers test key support levels

Bitcoin is tracing out an ABC pattern from a technical standpoint. The A leg represented the sharp decline on Thursday, the B leg was the corrective rally seen over the weekend, and the C leg pushed the price below Friday's low and toward the 200-day moving average. Buyers have intervened ahead of that moving average on two occasions. The key question now is whether they can push the price back above the previous floor.

In the accompanying video, each segment of the move is examined, along with what buyers need to achieve to regain some control, where sellers can position themselves against any rally, and what scenarios unfold if the 200-day moving average is broken.

A. The risk-off sell-off breaches the hourly moving averages.

On Thursday, Bitcoin faced selling pressure as risk-off sentiment intensified after the US election. The price dropped below both the 100-hour and 200-hour moving averages with strong momentum and remained beneath them. This was the first technical signal that sellers had seized control.

The swing-area support near $74,925 held firm on Friday. Buyers had a level to defend, and that support gave them room to push the price higher over the weekend. The next challenge was how the bounce would fare when it encountered resistance.

B. The weekend recovery halts at the broken 38.2% Fibonacci retracement.

The rally brought Bitcoin back toward the previously broken 38.2% Fibonacci retracement at $76,052. Sellers pushed back against it, and the price reversed to the downside. This provided traders with a level to define risk on the upside and refocused attention on Friday's support.

This time, the support near $74,925 gave way. With buyers losing the level they had defended on Friday, the price extended toward the next major target: the 200-day moving average.

C. Buyers step in ahead of the 200-day moving average.

The low reached $73,460, approximately $310 above the 200-day moving average at $73,153. Today, the price came within about $500 of the moving average before bouncing once more. Buyers are intervening ahead of it, and that moving average now serves as the downside benchmark for both camps.

On the upside, the former support near $74,925 now acts as nearby resistance. A move back above that level, with a sustained hold, would bolster buyers' confidence and bring the $76,052 retracement back into play. If sellers can cap the bounce near the old support, they maintain the short-term advantage. A drop below the 200-day moving average would hand them more control, putting the 50% retracement at $72,554 in focus.

Educational insight. Using an ABC pattern to define risk.

In this case, the A leg established a downside bias when Bitcoin broke the hourly moving averages. The B leg showed where sellers were willing to re-enter. The C leg then took out the prior low and brought the next support target into view. Each leg gave traders a level to assess whether the price action was following through.

The next signal comes from how price behaves at the old support. If Bitcoin moves above $74,925 and buyers defend it on a retest, they have a closer level to rely on and a reason to aim for $76,052. If the rally stalls at the old support, sellers have a nearby level to define their risk, leaving the 200-day moving average as the downside target. That is how the same chart can provide a roadmap for both sides.