Bitcoin USD daily basis
Bitcoin USD Chart Analysis - Correction Starts After New ATH
At the beginning of the reporting week, on Monday already, increasing declines led to a considerable price drop after reaching a new all-time high at 58,500 USD on Sunday. The sharp correction on Monday led back to a low of 46,573 USD in the course of the day, which corresponded to a minus of over 20% compared to the previous day. Although the price recovered back above 54,000 USD by the daily close, the market impressively signaled a stalling of the previous week's bullish momentum. Accordingly, further selling led to a renewed correction on Tuesday, which temporarily pushed the price below 45,000 USD at the daily low. However, the daily closing price came back up again at a higher level of just under 49,000 USD. On Wednesday, there was a breather at the level of the previous day, which took place in a trading range of around 700 USD. From Thursday, however, the selling pressure increased again, but no longer with the intensity of the previous days. Consistently lower respective daily highs and lows in the last days of the reporting week brought the price to the 43,000 USD zone on Sunday afternoon. At the end of the week, the price recovered to the area above 45,000 USD.
Another all-time high after a month-long correction phase
Review daily interval
After the price plunge in mid-March 2020, a veritable countermovement established itself. This led to the resistance zones from 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. The aforementioned resistance zone had been effective since January 2018, and served as a zenith for the price several times since then. 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 break through the old all-time high at 20,000 USD saw a strong accentuation of the uptrend. The continued parabolic upward movement led to a new all-time high at 42,000 USD on January 8. A subsequent correction brought the price back to the 30,000 area USD. A decisive hold of this level led to a series of higher daily highs and lows. Subsequently, the forming negative chart formation (descending triangle) was broken towards the upside and thus negated. This increased the chances that the previously seen lows just below 30,000 USD already represented the low of the recent correction. Since the break of the old all-time high of January 8, the resumption of the parabolic rise was impressively resumed.
After reaching another all-time high in the previous week, a correction set in during the reporting week, taking Bitcoin back to the created resistances of the first correction phase of this year. In the price zone around 40,000 USD, where the aforementioned resistances now serve as support, the 50-day average (light blue line) is now also located. This served in the first correction phase as a good indicator for the upward trend accentuated since October.
The correction initiated in the reporting week is to be seen as a calming countermovement to the recent heavy upward pressure for the time being, which does not (yet) strongly affect the bullish structure in the daily interval. The selling wave on Tuesday also led to a cut of the MACD signal line (1) in the overbought area. The 40'000 mark serves as a determining indicator for an intact bullish momentum for the time being. Resistances exist in the zone 50'000 - 52'000 USD. A break through this area makes a resumption of the parabola likely.
Macro: New all-time highs
Bitcoin was able to set a higher high above 10,000 USD in the weekly interval for the first time 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 the break of the bearish trend, signs of a valid trend reversal have been building up. 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. This was accomplished in mid-December 2020. Since then, a strongly accentuated price discovery above this mark has been taking place.
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 USD 20,000 impressively demonstrated the power of the upward movement that had been established since October. It resulted in a parabola, which reached its first high at just over 42,000 USD. After a one-month correction, this was continued and found its preliminary high above the 58,000 USD mark.
In case of an incipient correction, a respect of the previously created supports (green) over the next weeks/months will be necessary to sustain the initiated phase of exploration in new price spheres. What remains to be observed here is the first zone of the one-month march stop around 39,000 USD. In case of a continued correction, the 21-week average (2) becomes relevant, which so far could reliably indicate bull and bear phases. This is currently just below 26,000 USD and rises accordingly quickly. Further support zones in the weekly interval can be found in the area of 20,000 USD.
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.
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.