Bitcoin USD daily basis
Bitcoin USD Chart Analysis - Countermovement to the 40'000 USD Resistance Zone
In the reporting week, the countermovement that started in the previous week was consistently continued. On Sunday, the Bitcoin price was already able to close the week at the first resistance zone around 35'000 USD. With the positive momentum of the previous week behind it, it managed to overcome said the resistance area on Monday. This led to a real price firework, which lifted the price in the course of the day even briefly above the 40'000 mark. The day's closing price of 37'262 USD was still well above the 35'000 USD resistance, which had been formed for over a month. As a result, a change in market sentiment was evident. Accordingly, the rest of the reporting week was also extremely positive. Already on Wednesday, the 40'000 USD mark was tested again. After a short consolidation on Thursday, Friday saw another significant daily gain with a daily closing price of 42'230 USD. By the weekend, the price remained at the newly climbed levels above the 40'000 USD mark. Thus, Bitcoin closed the week with a significant gain at a level not reached for 70 days.
Attempt to overcome the upper area of the price corridor
Review Daily Interval
After the price plunge of 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 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 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 clearly below it for the first time, 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. As a result, the price consolidated in the corridor 30'000 - 40'000 USD.
Outlook
After the 30'000 support zone was tested several times with no real breakthrough taking place, an impressive countermovement started after the last failed attempt. The starting signal of the incipient upward movement was congruent with a break of the downward trend in the RSI index, which has lasted for 194 days, and which has been indicated here several times.
The powerful countermovement of the last two weeks led Bitcoin directly to the resistance zone of 40'000 USD, respectively to the upper area of the price corridor that has been persisting for 10.5 weeks. The "rounding bottom scenario" has manifested itself in a massive countermovement. The price is now well above the 50 day moving average again, but still below the 200 day moving average.
The danger of a "bull trap" is still present. Constructively, the bottom found in the area of the 0.618 Fibonacci point between the start of the rapid upward trend since the end of October and the all-time high of mid-April is to be valued. For a continuation of the newly awakened bullish momentum, the sustainable overcoming of the 40'000 resistance zone is required. A possible correction only clouds the positive picture with a fall below the 35'000 USD zone, respectively a renewed approach of the area above 30'000 USD.
Notable cracks in the fundamentals
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. 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 phases 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 0.5 and 0.618 respectively. A recapture of the 21-week average is conducive to a positive picture over the next few weeks and would at the same time mean a break of the historical resistances from 48'000 USD. Continued trading above the 40'000 USD mark also reduces the risk of a forming shoulder-head-shoulder formation.
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.
