Weekly Bitcoin USD chart analysis calendar week 38 – 2021

Bitcoin USD Chart Analysis - Sustainable Overcoming of the 50'000 Level Fails

In the reporting week, the short-term stabilization at the level of 45’000 USD came to an abrupt end. The constructive technical micro picture of the previous week was impressively negated on Monday. Incipient sales at the start of the week resulted in a daily close of 42'988 USD, which corresponded to a whopping minus of 9% compared to Sunday. The break through the support zone led to further selling pressure on Tuesday, which took the Bitcoin price directly to the elementary support area 40'000 USD at 40'719 USD at the close of trading. Within Tuesday's trading action, moreover, a daily low of 39’600 USD was reached. On Wednesday, the important support zone finally attracted buyers into the market, which continuously carried the price back over the day to 43'575 USD. Thursday also saw renewed gains at the close of the day at 44’897 USD. Thus, the market was exactly below the zone where, after the sell-off a good two weeks ago, a first bottoming took place. Serving as a new resistance, the subsequent trading action, marked by a closing price of 42’848 USD and a daily low of 40’683 USD, failed spectacularly. Saturday saw a consolidation in the 42’000 USD area, while Sunday saw a recovery to 43’000 USD after another failed attempt to approach the 40’000 zone.

The moment of truth is approaching

Daily Interval Review

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 nearly two-month consolidation phase, 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 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 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 for the first time clearly below it 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. Subsequently, the price consolidated in the corridor 30'000 - 40'000 USD for three months, until the recent breakout from the upper area of the corridor. This leads directly to the resistance zones that formed between February and May.

Outlook

We are above the 11-week price corridor at 30'000 - 40'000 USD. A "rounding bottom scenario" in the area of the 0.618 Fibonacci point, which is calculated between the start of the rapid uptrend and the new all-time high, has manifested itself in a strong upward movement. The impressive counter-trend came determined and took Bitcoin directly to the 50’000 resistance. A sustainable establishment above this area failed for the time being and led to a steep price correction.

The price area around 50,000 USD has repeatedly played a determining role since February and is accordingly to be classified as significant resistance. After a first failed attempt to break through, the market stabilized for the time being in the support area of 45,000 USD and thus above the 50-day and 200-day averages. In the reporting week, however, another wave of selling led directly back to the essential 40’000 support zone. The moment of truth is thus coming a little closer again. The macro picture is still under the sword of Damocles of an establishing "bull trap". A drift below the 40’000 range would reinforce such a scenario. On the other hand, a recapture of the 50’000 – 52’000 USD area which was reached last leaves a good chance open for a new price discovery above the all-time high.

New all-time high or bull trap

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 that brought Bitcoin back to the 30’000 USD mark in just two weeks. A subsequent breakout from the 10-week 30’000 – 40’000 USD consolidation area will bring Bitcoin back to the 50,000 resistance.

Outlook

The price movements in the past year created a good foundation to sustainably climb to new spheres beyond the all-time highs reached in 2017. The break of the USD 20’000 mark impressively demonstrated the power of the upward movement that has 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.

Bitcoin was able to leave behind the three-month correction phase in the 30’000 – 40’000 USD zone. The consolidation took place in the interesting 0.618 Fibonacci area since the start of the bull market. After breaking out of the upper price band of the three-month corridor, a continued significant counter-move took the price back to the 50'000 USD zone within the past 3 weeks while negating a forming shoulder-head-shoulder formation.

With the holding of the 30'000 support in the 0.618 Fibonacci zone, a scenario of a continuing price development, which eventually leads beyond the existing all-time high, remains intact. Such a scenario is reinforced by price action above the 40’000 support zone and a sustained recapture of the 21-week moving average over the near term. A presumed "make it or break it" situation is emerging in the current price area in the following weeks. Here, the market decides whether a price discovery above the all-time high should take place or whether the current upward movement below the all-time high ends in a "bull trap" as in January 2018.