Bitcoin USD daily basis
Bitcoin USD Chart Analysis - Consolidation After Sell Off
The reporting week was all about handling the selloff of the previous week. Here, the market participants were mainly focused on the new lows that were created on "Black Wednesday" of the previous week - just below 30,000 USD. In the course of Sunday's trading, prices travelled in this direction again, with a daily low of 31,000 USD and the close of trading being marked at 34,758 USD. Thus, old lows were no longer undercut and the market has shown that buyers can be found in the region 30,000 USD, which still serves as a support zone. Accordingly, there was follow-on buying on Monday, which drove the price back to 38,887 USD by the daily close. Subsequent trading over 3 trading sessions moved in decreasing trading ranges below the resistance zone at 40,000 USD. On Friday, consistent trading at 40,000 USD was interpreted as weakness, and selling brought the price back to 35,680 USD. The weekend was characterized by a consolidation in the range of 33,000 – 36,000 USD.
Setback below meaningful supports
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 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 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). However, the fourth correction led for the first time clearly below it and thus it also came to a violation of the trend line serving as support since the beginning of the year formed by the respective daily lows. In the past two weeks, this resulted in an accelerated downward trend, which led below important support zones.
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. There was also a sustained break of the 50-day moving average (light blue line) recently, which previously served as a good indicator of the bullish phase that started in November. With the recent price decline, the 200 day moving average has also been undercut, which has not occurred since April 2020. The bullish structure is battered, but not yet completely broken. The 30,000 USD zone remains interesting, which for the time being served as the bottom of the current sell-off. This area also represents the 0.618 Fibonacci point between the start of the rapid uptrend since late October and the all-time high of mid-April.
Bitcoin was able to defend the lows of the previous week for the time being and trading activity was concentrated in the USD 30,000 - 40,000 corridor as suspected. A breakout from this area will determine the further direction of travel based on technical factors. The 30,000 USD area represents one of the last bastions of the bulls. The resistance zone 40,000 USD, consisting of historical price action from January as well as the 200 day average was tested in the reporting week, but could not be breached. Currently, time is running against the bulls as the sell-off of the previous week has damaged the overall structure. For example, trading below the 200 day moving average has never been recorded in an intact bull market before.
Climbing back to the 42,000 USD resistance zone would improve the technical picture a bit for the time being, while falling below the 30,000 zone would make a visit to the old all-time high of 20,000 USD seem likely.
Macro: Remarkable cracks in the foundation
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 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, which brought Bitcoin back to the 30,000 USD mark in just two weeks.
Outlook
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 strength of the upward movement that had 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.
It remains to be seen how sustainable the current sell-off wave will be. Bitcoin had equally experienced setbacks of >50% in bull markets in the past. Depending on the point from which one calculates the Fibonacci retracements (start bull market - ATH 65k or breakout old ATH 20k - ATH 65k), we are currently in the interesting zone of 0.5 or 0.618. A recapture of the 21-week average is necessary over the next few weeks for a positive picture, and would also mean a break of the historical resistances at 48,000 USD. Setbacks at lower levels carry the risk of a forming shoulder-head-shoulder formation, which is a negative indicator.
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
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