Bitcoin Price Levels to Watch After Inauguration Day Volatility

Bitcoin surged to a record high above $109,000 ahead of Donald Trump's inauguration on Monday, but pared its gains as the new U.S. president made no mention of cryptocurrency during his inaugural address or other appearances after taking office. As the dust settles from the inauguration day volatility, investors should keep an eye on key support and resistance levels in the Bitcoin market to navigate the potential price swings.



Key Support Levels to Watch

The first key lower level to watch sits around $92,000. This area could encounter support near the early-November peak that closely aligns with several pullback troughs that formed on the chart between late November and early January. A close below this level may see a move down to the $87,000 level, a location on the chart where investors could look for buying opportunities near the bottom of a pennant pattern that preceded the cryptocurrency's move higher in the first half of December. Bitcoin bulls' failure to defend this level opens the door for a more significant drop to around $74,000. Investors who favor buy-and-hold strategies may seek entry points in this region near a multi-month horizontal line that links the March and October 2024 peaks with the nearby rising 200-day moving average.



Important Overhead Areas to Monitor

If Bitcoin moves higher from here, investors should keep a close eye on the $106,000 area. The cryptocurrency has struggled to stage a decisive close above this number since posting its record closing high in mid-December. Finally, it's worth monitoring the $120,000 area. This location may find overhead selling pressure near a measured move price target that calculates the depth of the cryptocurrency's recent rangebound trading activity and adds that amount to the breakout point. For example, adding $14,000 to $106,000 projects a target of $120k.

Bearish Candlestick Patterns Signal Caution

After climbing today to the all-time high, the price of bitcoin retreated to form a shooting star, a candlestick pattern that warns of a potential reversal. What's more, the shooting star followed a bearish engulfing pattern over the weekend, another candlestick pattern that warns of a move lower. In further signs of waning price momentum, as today's peak made a higher high, the relative strength index (RSI) made a relatively shallower high to create a bearish divergence between the price and indicator, indicating a possible double top.



Regulatory Expectations and Policy Changes

Regulatory expectations and potential policy changes under the new administration play a significant role in shaping Bitcoin's price trajectory. The incoming Trump administration has been vocal about its support for the cryptocurrency market, with Trump himself having pledged to make the US the world's crypto capital and backed the idea of creating a strategic Bitcoin stockpile. These expectations have fueled optimism among investors, leading to a significant rally in Bitcoin's price since the early-November election. However, it is essential to note that the actual implementation of these policies will depend on various factors, including regulatory alignment and collaboration with the Federal Reserve.

In conclusion, investors should monitor key support and resistance levels in the Bitcoin market following the inauguration day volatility to navigate potential price swings. Bearish candlestick patterns, such as the shooting star and bearish engulfing pattern, can influence Bitcoin's price action in the short term by signaling a potential reversal or move lower. Regulatory expectations and potential policy changes under the new administration also play a significant role in shaping Bitcoin's price trajectory. By staying informed and vigilant, investors can make well-informed decisions and capitalize on opportunities in the volatile cryptocurrency market.