Watch these two levels if Bitcoin price sees a major correction before $20K

Bitcoin is leading a monster rally, but is BTC overdue for a sharp correction?

Bitcoin (BTC) is on the run, printing a new high with each day. After officially achieving a new all-time high by market cap, will Bitcoin finally break through that elusive $20,000 barrier once more, or will we first see a major correction?

When correction?

BTC/USD 1 week chart. Source: TradingView

It’s hard to not get excited when looking at the weekly Bitcoin chart. In the past 30 days, Bitcoin has undergone a true parabolic run. But it is yet to reclaim its previous all-time high, which is just 10% away.

However, as the saying goes, “What goes up must come down,” and right now, the question on everyone’s mind is, “When correction?”

The doomsday scenario of the Fibonacci retracement levels paints a bleak picture of a 50% correction to the .618 of around $9,000. But in a post-halving bull run, is this something hodlers need to prepare themselves for, or will previous resistance levels serve as the support on Bitcoin’s stairway to the moon?

BTC/USD 1 day chart. Source: TradingView

The daily Bitcoin chart hints at levels that people might be able to stomach a little better, with the previous $17,000 resistance being the first level of support to hold, before potentially dropping to $14,000 and $12,500.

While this would represent close to a 25% drop in the price of Bitcoin, it would represent a “healthy” pullback, allowing the king of cryptocurrencies to entice more retail buyers to step in and buy the dip, and potentially push the price above the key $20,000 level.

You might be screaming at the screen in disbelief right now, wondering how on earth this would be healthy. However, the fact remains that we must have a correction at some point, and the higher the price continues to climb, the steeper the correction will be.

In other words, it’s important for Bitcoin to find a new local bottom if BTC is to climb to new all-time highs.

Bitcoin’s strong trajectory

BTC/USD 1-HOUR chart. Source: TradingView

Zooming into BTC/USD on the hourly chart provides a different perspective, one that shows a structure that has been valid since the beginning of November. This shows that Bitcoin is currently overextended and has already tapped the mid-channel support after hitting the top of the channel.

Should the structure remain intact, this view paints a downside of just 9% to the lower channel support of around $16,285. But for now, it seems the previous resistance of around $17,000 is holding quite well.

Should Bitcoin punch through the upper resistance of the channel around $19,000, then it could be that we already had our correction, which will catch those trying to short the local top off-guard.

Heatmap data suggests the channel will hold

BTC/USD 1-hour chart. Source: Tensorcharts

Heatmap data on Tensorcharts shows that there are sell walls at $18,500 and $19,000, indicating that whales are paying attention to the current ascending channel.

Interestingly, there are multiple buy walls between $17,800 and $17,000, further signaling the upper part of the channel is the range that Bitcoin could expect to stay in over the coming days.

However, once $19,000 pops, there’s very little in the way of resistance before Bitcoin could go on to print new highs, and if you want to know what price level that is, I suggest purchasing a crystal ball.

The bearish scenario for Bitcoin

Should the mid-channel support of $17,000 fail, the last level to hold sits around $16,285 for the current structure to become invalidated. From here, I would expect the next logical floor to be found around the $14,000 region.

The bullish scenario for Bitcoin

Closing above $19,000 opens up a whole new chapter in the history of the price of Bitcoin. Attempting to forecast where the price will go at this stage would be nothing more than a guess.

Rainbow chart. Source: Blockchaincenter

However, if you follow the Blockcenter rainbow chart, Bitcoin looks set to move from the “Accumulate” to “Still Cheap” color level, which puts Bitcoin at over $22,600 in the coming week.

For now, it’s all about price discovery. As many of us have waited three years for this moment, I suggest sitting back and enjoying the ride.

The views and opinions expressed here are solely those of @officiallykeith 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.