Bitcoin USD daily basis
Bitcoin USD Chart Analysis - "Sell Off" to Close the Week
The upward movement formed in the previous week could not be continued in the reporting week. On Monday already, the market tested the strength of the recent 14-day trend of higher daily lows. This was still defended with a daily closing price of 55,866 USD. On Tuesday, accordingly, trading followed at a slightly higher level than the previous day, directly at the 50-day average. For the time being, momentum seemed to be lost and thus a larger selling wave occurred on Wednesday, which brought the Bitcoin price back to the support zone of 50,000 USD. This was to an area which the Bitcoin price has returned several times since mid-February. Here, the price lingered accordingly and so the trading activity on Thursday and Friday was concentrated around the zone 50,000 USD, partly with considerable trading ranges. At the weekend, selling pressure followed again, which led Bitcoin below this support zone. On Sunday, the trend continued accordingly and the market exited the reporting week at around 45,000 USD near the weekly low.
Decreasing momentum of the uptrend
Review Daily Interval
After the mid-March 2020 price plunge, a veritable countertrend was established. This led to the resistance zones abovehal 10,000 USD. After an initial rejection and a consolidation phase lasting almost two months, 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 several 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 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 USD 65,000 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). The fourth correction on the led now for the first time clearly under it and thus it came also to a injury of the trend line, which developed by the respective lowest prices since beginning of the year.
Outlook
With the correction that started on April 18, Bitcoin left the lower area of its channel formed since the beginning of the year, and thus the trend line that defined the rapid uptrend since then. 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 has been broken. The decreasing momentum is well visible on the daily RSI indicator, among others. The leaving of the parabola in the weekly interval (see macro) also speaks the same language. First and foremost, this does not have to mean a sign of a trend reversal, however, a continued price increase is likely to proceed at a more leisurely pace from now on.
The recently successfully defended support zone 48,000 - 50,000 USD was tested again during the reporting week and seems to be falling. The recently formed micro uptrend is history and the technical tenor refers again to the question: Does the slowdown of the uptrend already harbour the danger of a trend reversal? From a technical point of view, it is still too early for this eventuality. What is undisputed is that a larger consolidation is emerging. If this will respect the historically formed supports in the future, the entire structure of the uptrend is not at risk.
The 50,000 support zone is now active as resistance and indicates the immediate trend. As mentioned in the last report, extended support is expected in the 45,000 USD and 41,000 USD area, respectively, in this scenario. These zones are currently being tested. Looking at the price constellation in an extended time horizon, a violation of the bullish sentiment and thus a potential trend reversal is only to be feared in the territories below 37,500 USD (see next section).
Macro: End of parabolic price discovery
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 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 was accomplished in mid-December 2020. Since then, a strongly accentuated price discovery above this historical 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 has been establishing itself since October. Bitcoin's observable parabolic price discovery mode (yellow) has recently come to an end. Henceforth, a slowdown of the upward movement is to be expected. The structure of the uptrend still has a good foundation.
Outlook
In case of a continued price correction, a respect of the previously created supports (green) over the next weeks/months will be necessary 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. This is also the location of the 21-week average (2), which has reliably indicated bull and bear phases so far. The region 37,000 – 39,000 USD serves as the last bastion of the bulls for the time being. Here are the supports formed at the beginning of the year and the 0.618 Fibonacci point, which is 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.
