Bitcoin USD daily basis
Bitcoin USD Chart Analysis - Defending the 40,000 Support Area
During the reporting week, it was important to find out if the market was serious about breaking through the resistance above the 40,000 zone in the previous week. After consolidating in the $42,000 area over the weekend, another rally occurred on Monday, which allowed Bitcoin to end the day at $43,892. Tuesday also saw another strong price gain at 45,496 USD, but at the close of trading, the price weakened and only led to a slightly higher close than the previous day at 44,128 USD. The fluctuation range of almost 7% within the trading session indicated that the air is getting thinner after a whopping price increase of 21.8% in just 5 days. At mid-week, however, Bitcoin was once again able to record a slightly higher price than the previous day at USD 44,368. With 45'878 USD at the daily high on Thursday, the price had already arrived in the middle of the next strong resistance zone. This circumstance had caused profit-taking within the day, which resulted in a daily close at 43,552 USD. Also on Friday, losses dominated and let the price in the area 42'400 USD go out of the day. The weekend was unspectacular. In narrow trading, ranges were traded around the zone of Friday, which led to a weekly close in the area of 42,350 USD.
Break of groundbreaking supports
Daily Interval Review
After the price drop 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 of almost two months, a breakthrough through the fundamental resistance zone followed on July 27, 2020, which persisted since August 2019 and accordingly caused Bitcoin to fail several times already.
The area around USD 10,000, which served as resistance, 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 USD 14,000, was located in this price area. On the other hand, the zone around USD 10,000 simultaneously acted as a witness of the still bearish trend from lower highs since December 2017 (see the macro view on a weekly basis). Bitcoin was able to establish itself above the newly created support in the USD 10,000 area since the end of July 2020 and provided initial confirmation of a trend reversal of the bear market that had persisted since 2018 with the break of the resistance zone around USD 12,200 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.
With the breakthrough the old all-time high at USD 20,000, the trend reversal was definitely heralded. Accordingly, there was a strong accentuation of the uptrend, which brought the Bitcoin price to its new all-time high just below 65,000 USD in just over 4 months. However, the rapid upward movement was abruptly halted in mid-May 2020, taking Bitcoin back to the USD 30,000 areas. After a three-month consolidation phase, the upward movement was continued no less spectacularly after a "rounding bottom" in the 0.61 Fibonacci area, which finally ended with a new all-time high at USD 69,000 in October 2020 after a "retest" of the 40,000 zone. Since then, a strong correction phase has dominated once again, which is currently leading the Bitcoin price back to trend-determining price territories.
Outlook Daily Interval
Just 73 days after reaching an all-time high at USD 69,000, the break of the 40,000 support zone suggests a change in price. The bull run, which has lasted over 401 days, seems to be running out of steam. Accordingly, the further direction of travel could turn out to be longer sideways movements with a positive trend. The bottom formation in the 34,000 area must still prove itself.
The remarkable countermovement in the previous week could be attributed to an initial reaction to an oversold market. The impressive bounce back by the bulls on Friday led directly to the resistance zone in the USD 45'000 area, where the market failed for the time being. The first thing to watch is whether the 40'000 zone, which has only just been conquered, can be defended. In the medium term, the price should establish itself above 42'000 USD to grant a continued constructive price formation. Finally, the series of lower highs in the USD 45'000 area must be broken to herald a trend reversal of the correction since the all-time high. A break of 40'000 support suggests a "retest" of the lows of 2 weeks ago.
The new price discovery phase shows weakness
Weekly Interval Review
Bitcoin was able to set a higher high above USD 10,000 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 scenario was completed in mid-December 2020. This was followed by a strongly accentuated price discovery above this historical zone, which produced a new all-time high of USD 65,000 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 and even below the 21-week average (2) that has defined reliable bull or bear market phases in the past.
However, a subsequent breakout from the 10-week USD 30,000 - 40,000 consolidation area and a subsequent successful "retest" of the upper range of this channel most recently took Bitcoin above the all-time high created in April in an impressive counter-move. After the creation of the new all-time high in the 69,000 USD area in November 2021, a vehement correction phase set in again, analogous to the pattern observed in May. This initially led to the break of the 50,000 support zone, which then promptly caused a bounce in this area, which now acts as resistance. Accordingly, the last few weeks were once again characterized by the correction phase that has been dominating for two months now and even caused Bitcoin to break through the important 40,000 support zone most recently.
Outlook weekly interval
The massive bull phase, which has lasted since July 2021 and originated from the healthy 0.618 Fibonacci area, which has been calculated since the start of the bull market and the all-time high of April, has recently been put to the test. The undershooting of the 40,000 area makes a rapid continued price discovery beyond the 69,000 all-time high a distant prospect for now. The market is setting a slower pace with the risk of falling into a bear market.
The series of higher weekly lows or highs since October 2020 is intact, but significant cracks have appeared in the fundamentals as a result of the break below the 40,000 zone. The break of the trend line since the start of the uptrend and a negative looking "Head and Shoulder" formation complete the deterioration of the technical picture. The weekly RSI index (3), which showed a negative divergence with the price trend despite an all-time high, had indicated that the momentum was on weak legs. The correction in recent weeks impressively confirmed the picture of this indicator.
Since reaching a new all-time high at USD 69,000 three months ago, the bitcoin price has corrected by around 50%. Historically, such price behaviour has been observed more often even in bull market phases. The ultimate deciding battle between the bulls and bears would take place in the 30,000 area. In this zone is the 0.618 Fibonacci area, which has been calculated since the beginning of the bull market and the all-time high. A sustained undershooting of this zone would also undercut the price area already contested in July 2021, which would come close to bear market confirmation. For the time being, the 42,000 resistance level and the aforementioned support zone serve as indicators for the further price trend.
Disclaimer
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