Bitcoin USD daily basis
Bitcoin USD - Breakthrough through 12'000 leads to new annual highs
We look back on an impressive reporting week. After consolidating in the USD 13,500 range, Bitcoin was able to break out into higher spheres again, and further extend its price increase that started in the previous week. While Monday saw a consolidation below the USD 14,000 mark, this was followed by renewed upward pressure on Tuesday, which has, since October 21, been seen on several occasions. For the first time since January 2018, this pushed the Bitcoin price above USD 14,000 at the end of the day. On Wednesday, the determination of the market was strengthened with another higher daily closing price above USD 14,000. This foundation was sufficient for the impressive price increase to USD 15,700 on Thursday. The daily closing price was only just below the high, and helped Bitcoin to a daily gain of 10%. This was followed on Friday by a failed attack on the USD 16,000 mark, which ended with a doji. A correction on Saturday brought the price back to USD 14,800, with a daily low of USD 14,300. Sunday was already friendly again, with trading around USD 15,600.
Breakthrough through "last resistance" 14'000 USD
Review Daily Interval
A veritable countermovement established itself after the price slump in mid-March. This led up to the resistance zones starting at USD 10,000. After a renewed rejection at the beginning of June, an almost two-month consolidation was observed. This was characterized by a series of higher daily lows and lower daily highs. The series of lower highs was broken on 22 July. This was followed on July 27 by a break through the resistance zone around USD 10,500, which has been established since August 2019 and which Bitcoin has already failed to break several times.
The resistance zone around USD 10,000 was interesting in several respects. On the one hand, the 0.618 Fibonacci point (1) of the entire downward movement, which started at the end of June 2019 just below USD 14,000, is located here. On the other hand, the zone around $10,000 also served as a confirmation of the still bearish trend of lower highs since December 2017 (see next section). This zone now counts as a significant support (green).
Outlook
Since the end of July, Bitcoin has been able to establish itself above the newly created support in the USD 10,000 range. This support was confirmed by a re-test in early September and serves as the beginning and thus as an important pillar of the latest positive trend. Since then, further significant resistance zones have been overcome. Two weeks ago, for example, the resistance zone around USD 12,200 was breached, which became established as early as January 2018 and has served as the zenith for the Bitcoin price on several occasions since then (see macro outlook). The positive trend was particularly strong in the reporting week. It led Bitcoin through the last visible resistance before the all-time high of around USD 14,000. With the breakout, a breakthrough of the trend channel, which has been forming since March, was also achieved. This zone now serves as support again, both through the S/R flip and the upper trend line of the channel.
The recent rallies seen are strong evidence that the market is serious about the trend reversal that has begun this year. A final resistance, which was stopping a "clear sky" scenario up to an all-time high, was overcome with the breakthrough of the USD 14'000 mark in the reporting week. Last week's price movements have created a foundation that is necessary to be able to reach the highs of 2017 again. In order for this to succeed, the recently overcome resistance levels should now be respected as support in the coming weeks (green). The current strong upward movement comes from overbought territory on the RSI and MACD indicators (3). Setbacks should find initial support at USD 14'000. An important support has formed at around 12'000 USD. Serving as resistance since August 2019, the lower trendline of the channel (blue), which has been established since March 2020, is also located in this support area.
Should the lower trendline be broken in case of a stronger setback, then the USD 10'000, where the 200 daily average (2) is also moving in the meantime, is seen as an indicator of the bullish trend that has been established since March. However, if this zone is visited or undercut again, a longer lasting consolidation in the range of USD 9'000 - 11'500 can be expected.
Macro: Trend reversal manifesting itself
In 2020, for the first time, Bitcoin was able to set a higher weekly high above USD 10'000, breaking the prevailing bearish trend since December 2017. This broke the series of lower highs that had lasted for 135 weeks.
Since the breakthrough of the bearish trend, there have been an increased number of signs for a valid trend reversal. This can be legitimized by a continuation of the weekly candles within the establishing trend channel (1), as well as further development above the 21 week average (2).
A sustained respect for the newly created supports in the range of USD 12'000 and USD 10'500 over the next weeks/months not only underlines the legitimacy of the trend reversal. A breakthrough in the "last zone of resistance" at USD 14,000 took the price up to USD 16,000 in the reporting week. If the newly created supports (green zones, lower trend line trend channel (1), as well as 21 week average (2)) are respected in the coming weeks, there is not much to prevent a renewed attack on the all-time high of a good 20'000 USD.
A drop in price that would take the price back into the areas below USD 10,000 over several weeks would damage the positive momentum and would argue for a longer lasting consolidation in this area.
