Bitcoin’s price fell by 2% in less than an hour in a sharp correction on Monday, surprising unsuspecting traders probably due to three important technical factors.

The Bitcoin price (BTC) fell by 2% in less than an hour in a sharp correction on November 2, surprising traders with their guard down. Coincidentally, the CME Bitcoin futures market opened with a new gap, making $13,100 an area of interest for sellers.

Three technical reasons probably fuelled the sharp fall in Bitcoin’s price: the CME gap, increased resistance, and monthly moving averages (MAs).

There are now four Bitcoin WEC futures gaps

The Bitcoin WEC futures market is closed on weekends and holidays. This means that if BTC sees a large price movement during those days, a gap arises between CME’s and the cryptoexchanges.

Although there’s no comprehensive theory of why traders move to fill the gaps in Bitcoin GCE futures, historically, most of the Bitcoin GCE gaps have been filled.

Since October, Bitcoin has seen a strong recovery. Over the weekend, BTC volume tends to fall as the market becomes less active. But in the case of the past few months, the BTC has moved steadily upwards without a drop in volume.

As a result, this led to the formation of four single-file GTC gaps. Each weekly candle in the last month led to a new WEC gap, which is rare for Bitcoin. This means that WECs have moved so fast even during weekends that new gaps have formed in a row.

he gaps are at $13,100, $12,970, $11,505 and $11,100. These areas could be considered levels of interest to sellers. Coincidentally, the $12,970 to $13,100 range is an important area in terms of moving averages.

The next short-term Bitcoin monthly average is below $12,500

In Bitcoin’s monthly chart, the next short term moving average is the 5-day moving average at $12,203. Throughout history, even during bull markets, at least one short term moving average in the monthly chart was reached before a rally continued.

Bitcoin has recovered rapidly since early October, rising more than 25% from $11,775 to $13,500. The pace of the uptrend meant that BTC was unable to establish clear support levels in the higher term charts.

Over the past two months, Bitcoin has repeated the rally pattern followed by a short period of consolidation. On the daily chart, this created clear support and resistance levels, making the rally sustainable compared to previous ones.

However, in the weekly and monthly charts, Bitcoin is still far from the remarkable short-term moving averages. The closest average is the 5-day rally, at around $12,200.

The BTC breaks out of a major resistance level

Bitcoin tested the $14,000 resistance level on October 31 for the first time since December 2017. After such an important rally and a key new test, a sharp drop was expected.

Some traders said they were surprised by the intensity of Bitcoin’s price drop when it occurred. But, when they saw the high open interest in the futures market, traders said the move made more sense.

„Every once in a while I’m surprised by a move,“ said a pseudonymous trader known as CL. CL later added that the open interest was high enough to justify such a move. „Actually forget it, I miss reading how much open interest was going up before, this makes sense.“

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