Bitcoin surged 6.5% to a high of $58,153 on September 9. The bullish reaction followed a weekly close above $54,000, which allowed BTC to maintain its position above the 50-week exponential moving average (EMA).
Meanwhile, bullish traders are betting that the impending Fed rate cut and historically favorable market conditions in the fourth quarter will lead to a sustained rally. However, there is a possibility that the price will retest $54,000 before overcoming the psychological level of $60,000.
Bitcoin CME Gap Forms at $54,000
Bitcoin (BTC) futures trading creates what is known as a gap when there is a difference between the closing and opening prices on the next trading day. This gap is created on the Chicago Mercantile Exchange, as the CME, unlike the cryptocurrency markets, is closed on weekends.
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CME gap analysis has become a popular way to evaluate potential retest areas for Bitcoin when momentum breaks. When these gaps form, traders often mark them as potential support and resistance areas before a trend continuation or reversal.
There is currently a BTC CME gap between $54,000 and $54,450, which is a 6% drop from the current price.
Bitcoin CME gap on 4-hour chart. Source: TradingView
During Q3, Bitcoin formed a total of 10 CME gaps, each of which was filled during the active period. However, while some gaps were filled within a few days, others could take several weeks.
On July 12, the CME gap between $57,800 and $60,900 was not filled until the August Bitcoin correction. Therefore, it is likely that this gap will be filled soon.
Bitcoin CME futures chart. Source: TradingView
It is important to note that the CME gap does not need to be filled repeatedly. As highlighted above, BTC can continue to rise before returning to fill the aforementioned gap. However, independent trader DanCrypto
“As always, these don’t need to be filled in, but in a wide range of environments they often can be.”
When analyzing the liquidation heat map, the key levels are around $54,250, $53,440, and $52,300. These levels coincide with the lower bound of the CME gap and multi-month range above, which is a confluence that increases the likelihood of a retest.
Bitcoin Liquidation Heatmap Chart. Source: CoinGlass
As Cointelegraph reported, the $45,000 level appears to be serving as the “bottom” of the current bull market cycle.
BTC price may hit $58,000 resistance level again
While BTC has broken above the 50-day EMA level, it is facing resistance at the 100-day EMA and resistance is also expected at the 200-day EMA.
Bitcoin 4-hour chart. Source: TradingView
Therefore, BTC price may make a few more attempts towards $57,830 and $58,500 before it breaks down in the next 1-2 weeks.
In other words, there is a possibility that Bitcoin could fall into the demand zone of the CME gap of $53,500-$54,400 next week before it surges out of its current multi-month range.
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.