Bitcoin USD daily basis
Bitcoin USD Weekly Review: Consolidation after breakout of the 45'000 resistance zone
After the breakthrough through the important 45'000 resistance in the previous week, the further direction of travel should prove in the reporting week. Monday began friendly marked by a slightly rising price trend, analogous to the three previous trading sessions. With a daily close at USD 46'570, the still young pattern above the long-dominant resistance zone could be continued. An opening above the 47'000 mark on Tuesday promoted the price close to the highs reached in the previous week and let individual bulls already revel in 50'000 price targets. In the course of the day, however, profit-taking set in and turned the initial gains into losses with a daily close of USD 45'521. The highs of the previous week acted as new resistances and the combination with a weakening momentum finally resulted in a handsome price loss of over 5% on Wednesday. The market was back in the 43'000 area at the start of trading on Thursday and remained in narrow ranges at this level throughout the day. On Friday, there was another price setback, which led Bitcoin to USD 42'272 at the close of trading. A slight recovery trend was observed over the weekend, which finally brought the price back above USD 43'000 at the end of the week.
First signs of a trend reversal
Daily Interval Review
After the mid-March 2020 price plunge, a veritable countermovement established itself. This led to the resistance zones above USD 10'000. After an initial rejection and a consolidation phase of almost two months, a breakthrough through the fundamental resistance zone followed on July 27, 2020, which persisted since August 2019 and accordingly caused Bitcoin to fail several times already.
The area around USD 10'000, which served as resistance, 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 USD 14'000, was located in this price area. On the other hand, the zone around USD 10'000 simultaneously acted as a witness of the still bearish trend from lower highs since December 2017 (see macro view on weekly basis). Bitcoin was able to establish itself above the newly created support in the USD 10'000 area since the end of July 2020 and provided the first confirmation of a trend reversal of the bear market that had persisted since 2018 with the break of the resistance zone around USD 12'200 towards the end of October 2020. In the following weeks, the positive trend accentuated and led Bitcoin through the 14'000 resistance in early November 2020 and close to the then all-time highs around USD 20'000 for the first time in early December, which remained untouched for 158 weeks since the bull market in 2017.
With the breakthrough of the old all-time high at USD 20'000, the trend reversal was definitely heralded. Accordingly, there was a strong accentuation of the uptrend, which brought the Bitcoin price to its new all-time high just below USD 65'000 in just over 4 months. However, the rapid upward movement was abruptly halted in mid-May 2020, taking Bitcoin back to the USD 30'000 areas. After a three-month consolidation phase, the upward movement was continued no less spectacularly after a "rounding bottom" in the 0.61 Fibonacci area, which finally ended with a new all-time high at USD 69'000 in October 2020 after a "retest" of the 40'000 zone. Since then, a strong correction phase dominated once again, which led the Bitcoin price back to the USD 34'000 area and thus to trend-determining price territories. However, a bottom formation lasting more than 70 days, marked by higher lows, led Bitcoin above the stubborn 45'000 resistance.
Outlook Daily Interval
Just 73 days after reaching an all-time high at USD 69'000, the break of the 40'000 support zone at the end of the previous month suggests a change of course. The bull run, which has lasted over 401 days, seems to be running out of steam. Accordingly, the further direction of travel could turn out to be longer sideways movements and the bottom formation in the 34'000 area still has to prove itself.
Since reaching the low of the current correction since the all-time high, a first bottoming could be registered, which manifested itself with a series of higher daily lows. The subsequent countermovements, some of which were violent, each ended in the USD 45'000 area, a dominant resistance zone whose price area has frequently provided a new direction since January 2021.
The chances were good to overcome the already twice tested resistances in the area of USD 45'000 in the third attempt. This succeeded at the beginning of the reporting week and could be held over the week. The breakthrough confirms a successful bottoming since the low of the recent correction. In addition, the series of lower daily highs since the all-time high was broken. Both are important ingredients to build on the bullish momentum and ultimately tackle the 50'000 resistance. Corrections are not a leg-breaker as long as there is no undershooting of the newly formed structure from higher lows in the USD 40'000 area.
New price discovery phase shows weakness
Review Weekly Interval
Bitcoin was able to set a higher high above USD 10'000 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 became stronger. 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 scenario was completed in mid-December 2020. This was followed by a strongly accentuated price discovery above this historical zone, which produced a new all-time high of USD 65'000 in mid-April. A consolidation initiated since then ended in a veritable price slide that brought Bitcoin back to the USD 30'000 mark in just two weeks, even below the 21-week average (2) that has defined reliable bull or bear market phases in the past.
However, a subsequent breakout from the 10-week USD 30'000 - 40'000 consolidation area and a subsequent successful "retest" of the upper range of this channel most recently took Bitcoin above the all-time high created in April in an impressive counter-movement. After the creation of the new all-time high in the USD 69'000 area in November 2021, a vehement correction phase set in again, analogous to the pattern observed in May. This initially led to the break of the 50'000 support zone, which then promptly caused a bounce in this area, which now acts as resistance. Accordingly, the last few weeks were once again characterized by the correction phase that has dominated for two months now and even caused Bitcoin to break through the important 40'000 support zone most recently.
Outlook weekly interval
The massive bull phase, which has lasted since July 2021 and originated from the healthy 0.618 Fibonacci area, which has been calculated since the start of the bull market and the all-time high of April, has recently been put to the test. The undershooting of the 40'000 area makes a rapid continued price discovery beyond the 69'000 all-time high a distant prospect for now. The market is setting a slower pace with the risk of falling into a bear market.
The series of higher weekly lows and highs, respectively, since October 2020 is in tact, but significant cracks have appeared in the foundation due to the undershooting of the 40'000 zone. The break of the trend line since the start of the uptrend and a negative looking "Head and Shoulder" formation complete the deterioration of the technical picture. The weekly RSI index (3), which showed a negative divergence with the price trend despite an all-time high, had indicated that the momentum was on weak legs. The correction in recent weeks impressively confirmed the picture of this indicator.
Since reaching a new all-time high at USD 69'000 three months ago, the bitcoin price has corrected by around 50%. Historically, such price behaviour has been observed more often even in bull market phases. With the fresh break through the 45'000 resistance, the chances for an end of the recent correction phase increase. The series of lower highs since the all-time high has been broken, an important step for further price gains. Increased chances for a continued upward movement should bring the weekly RSI indicator with a break of its downward trend, which has lasted for more than a year.
However, if the recent upward movement fails with a renewed undershooting of the 40'000 zone, the ultimate decisive battle between the bulls and bears would probably take place in the 35'000 area. In this area is the 0.618 Fibonacci zone, which has been calculated since the beginning of the bull market and the all-time high. A sustained undershoot of this area would also undercut the price area already contested in July 2021, which would come close to bear market confirmation.
Disclaimer
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.
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