Bitcoin USD Chart Analysis - Sustainable Overcoming of the 50'000 Level Fails
The reporting week should show whether the previous week's sell-off at the 40'000 USD level will come to an end. On Monday, the Bitcoin price came under pressure once more, after a two-day stabilization in the area of 43'000 USD. Although a higher level of 44'366 USD was reached for the time being, sales in the second half of the day led back to 42'171 USD by the end of the day. A further decline on Tuesday brought the price at 41'030 close to the important support zone again, which marked the end of the price fall of the previous week. Thus, at midweek, there was another test of this support area. With a closing price of 41’519 and a daily low of 40’750 USD, the market held its ground on Wednesday at a slightly higher level than on the previous day. The renewed defence of the support zone attracted the first buyers on Thursday, which manifested itself in a higher daily close at 43’824 USD. The newly gained momentum was impressively continued on Friday. A price gain of almost 10% led to 48'149 USD and thus directly back to the highs of the previous week. Initial profit-taking allowed Bitcoin to exit the market slightly lower on Saturday at 47’667 USD. On Sunday, however, follow-up buying started again already, and led at the daily high of 49'289 USD already very close to the decisive 50'000 resistance.
The moment of truth is approaching
Daily Interval Review
After the price drop in mid-March 2020, a veritable countermovement established itself. This led to the resistance zones above 10'000 USD. After an initial rejection and a nearly two-month consolidation phase, a breakout through the fundamental resistance zone followed on July 27, which had been established since August 2019 and had already caused Bitcoin to fail a few times to date.
The resistance zone around 10’000 USD was interesting in several respects. On the one hand, the 0.618 Fibonacci point of the entire downward movement, which was initiated at the end of June 2019 just below 14’000 USD, is located here. On the other hand, the zone around 10’000 USD simultaneously acted as a confirmation of the still bearish trend from lower highs since December 2017 (see macro view on a weekly basis). Bitcoin was able to establish itself above the newly created support in the 10’000 USD area since the end of July 2020 and provided a first confirmation of a trend reversal with the break of the resistance zone around 12’200 USD towards the end of October 2020. In the following weeks, the positive trend accentuated and led Bitcoin through the 14'000 USD resistance in early November 2020 and close to the then all-time highs around 20'000 USD for the first time in early December, which remained untouched for 158 weeks since the bull market in 2017.
Since the breakout through the important 14’000 resistance at the beginning of November, it has been blow by blow. The breakout through the old all-time high at 20’000 USD saw a strong accentuation of the uptrend, which saw the Bitcoin price mark its new all-time high just below 65,000 USD on April 14. The rapid upward movement was so far characterized by 3 corrections, each of which found its low point around the 50-day average (light blue line). However, the fourth correction led for the first time clearly below it and thus it also came to a violation of the trend line, which has served as support since the beginning of the year, formed by the respective daily lows. In recent weeks, this resulted in an accelerated downward trend, which led below important support zones. Subsequently, the price consolidated in the corridor 30'000 - 40'000 USD for three months, until the recent breakout from the upper area of the corridor. This leads directly to the resistance zones that formed between February and May.
We are above the 11-week price corridor 30'000 - 40'000 USD. A "rounding bottom scenario" in the area of the 0.618 Fibonacci point, which is calculated between the start of the rapid uptrend and the new all-time high, has manifested itself in a strong upward movement. The impressive counter-trend came determined and took Bitcoin directly to the 50,000 resistance. A sustainable establishment above this area failed for the time being and led to a steep price correction.
Bitcoin once again defended the 40’000 support zone during the reporting week, which resulted in a renewed approach to the 50’000 mark at the end of the week. The price area around 50’000 USD has repeatedly played a determining role since February and is accordingly to be classified as significant resistance. The moment of truth is thus getting a little closer. The macro picture is still under the sword of Damocles of an establishing "bull trap". A drift below the 40’000 areas would reinforce such a scenario and was prevented for the time being. On the other hand, a recapture and surpassing of the last reached area 50'000 - 52'000 USD leaves a good chance for a new price discovery above the all-time high.
New all- time high or bull trap
Rückblick Wochen Interval
Review weekly interval
Bitcoin was able to set a higher high above 10'000 USD for the first time in the weekly interval in 2020, which broke the prevailing bearish trend since December 2017. This broke the series of lower highs that lasted for 135 weeks (1).
Since this first overcoming of the bearish trend, the signs for a valid trend reversal have intensified. With the push through important resistance zones and a continuous development above the 21-week average (2), the probabilities for a renewed reaching of the all-time high created in 2017/18 increased visibly. This was accomplished in mid-December 2020. This was followed by a strongly accentuated price discovery above this historical mark, which produced a new all-time high of 65’000 USD in mid-April. A consolidation initiated since then ended in a veritable price slide that brought Bitcoin back to the 30’000 USD mark in just two weeks. A subsequent breakout from the 10-week USD 30’000 – 40’000 consolidation area will bring Bitcoin back to the 50’000 resistance.
The price movements in the past year created a good foundation to sustainably climb to new spheres beyond the all-time highs reached in 2017. The break of the 20’000 USD mark impressively demonstrated the power of the upward movement that has been established since October. The rapid price increase was now abruptly interrupted with a price drop, which even brought Bitcoin below the 21-week average (2) that has defined reliable bull or bear market phases in the past.
Bitcoin was able to leave behind the three-month correction phase in the 30’000 – 40’000 USD zone. The consolidation took place in the interesting 0.618 Fibonacci area since the start of the bull market. After breaking out of the upper price band of the three-month corridor, a continued significant counter-move took the price back to the 50'000 USD zone within the past 3 weeks while negating a forming shoulder-head-shoulder formation.
With the holding of the 30'000 support in the 0.618 Fibonacci zone, a scenario of a continuing price development, which eventually leads beyond the existing all-time high, remains intact. Such a scenario is reinforced by price action above the 40’000 support zone and a sustained recapture of the 21-week moving average over the near term. A presumed "make it or break it" situation is emerging in the current price area in the following weeks. Here, the market decides whether a price discovery above the all-time high should take place or whether the current upward movement below the all-time high ends in a "bull trap" as in January 2018.
All information in this publication is provided for general information purposes only. The information provided in this publication does not constitute investment advice and is not intended as such. This publication does not constitute and is not intended as an offer, recommendation or solicitation to invest in any financial instrument, including cryptocurrencies and the like. The contents contained in the publication represent the personal opinions of the respective authors and are not suitable or intended as a basis for decision-making.
Investing in cryptocurrencies, is fundamentally associated with risk. The total loss of the invested capital cannot be excluded. Cryptocurrencies are very volatile and can therefore be exposed to extreme price fluctuations in a short period of time.