Bitcoin USD daily basis
Bitcoin USD Chart Analysis - Strong correction over the weekend
The reporting week was characterized by the Sunday selloff that brought the bitcoin price to the 51,000 USD zone at the daily low and started accordingly cautiously. The regained territory around 55,000USD was held for the time being on Monday and Tuesday with trading ranges of 3,500 USD. On Wednesday, however, there was renewed selling pressure, which brought the bitcoin price back to 53,784 USD at the end of the day. From Thursday, consistently lower daily closing prices followed, characterized by respective lower daily highs. Consequently, the 50,000 USD mark was undercut for the first time since March 6 on Friday, taking the price to 47,500 USD at the daily low. Although at the end of the day, the price stabilized above the psychological mark of 50,000 USD once again. However, the bearish trend continued into the weekend. On Sunday, at a price of 48,500 USD, it was trading well below the 50,000 USD.
Break of the upward trend since the beginning of the year
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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 consolidation phase of almost two months, a breakout through the fundamental resistance zone followed on July 27. This 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 USD 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 characterized by 3 corrections, each of which found its low point around the 50-day average (light blue line). The fourth correction on April 18 came to a violation of the trend line, which was created by the respective lows since the beginning of the year.
Outlook
With the current correction, Bitcoin is leaving the lower area of the channel and is thus leaving its trend line which has been formed since the end of January. This has defined the uptrend since then. Also, for the first time since October 2020, there was a sustained break of the 50-day moving average (light blue line), which previously served as a good indicator of the bullish phase that started in November. The structure of the fast-paced uptrend is taking damage and was negated during the reporting week. Also, the leaving of the parabola in the weekly interval (see macro) speaks this language. In the first place, this does not have to mean a sign of a trend reversal, however, as already mentioned, the bears should have a say in the market events more often again in the future. They have already actively done so in the reporting week.
Accordingly, the market is testing the support zone in the area of 48,000 USD – 50,000 USD. Should this break, extended support is to be expected in the area of 45'000 USD and 41'000 USD, respectively. Resistances form the areas around 56'000 USD. Looking at the structure in an extended time horizon, a violation of the bullish sentiment and thus a potential trend reversal below 37'500 USD is emerging (see next section).
Macro: End of parabolic price discovery
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 the breakout 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 moving average (2), the probabilities for a renewed reaching of the all-time high created in 2017/18 increased. This was accomplished in mid-December 2020. Since then, a strongly accentuated price discovery above this mark has been taking place.
With the price movements in the past year, a good foundation was created to sustainably climb 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 had been established since October. It resulted in a parabola (yellow), which was negated during the reporting week. Bitcoin's parabolic price discovery mode has thus come to an end and a newly expected future slowdown in the upward movement and makes further and longer-lasting corrections more likely.
In case of a continued price correction, a respect of the previously created supports (green) over the next weeks/months will be required to make the initiated price discovery phase sustainable. For the time being, the support zone around 45,000 USD which was defined by the lows of February and March, remains to be observed. Just below it is also the 21-week average (2), which could reliably indicate bull and bear phases so far. The 37,000 USD – 39,000 USD region serves as the last bastion of the bulls with supports formed at the beginning of the year as well as the 0.618 Fibonacci point, which has been calculated since the breakout of the old three-year all-time high and the new all-time high.
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.
Risk notice
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.
