Bitcoin USD daily Basis
Bitcoin USD Chart Analysis – Reconquest of the 200 Day Average
In the reporting week, the question was whether the new situation of the 40,000 resistance zone, which was overcome last time, could hold. The omens were good, as Bitcoin was able to overcome the resistance zone for a second time on Saturday of the previous week and mark a new daily high for 79 days at 42,869 USD. After a consolidation on Sunday in the area of 44,000 USD, there was another upward movement on Monday, which already carried the price up to 46,285 USD. Over the next three trading days, a consolidation followed with respective lower daily closing prices, which overall took place in narrow trading ranges and brought the price back to 44,422 USD. On Friday, a breakout from the mini “bull flag” of the previous days caused a powerful price increase, which turned out to be the highest of the week with +7.6%. The new level 47,833 USD was briefly exceeded on Saturday, but incipient sales let the price until the end of the day with 47,109 USD slightly lower than the previous day from the market. A further price decline on Sunday led Bitcoin back to the 46,000 USD area.
Breakout from upper range of three-month 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 USD 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. As a result, the price consolidated in the corridor 30,000 – 40,000 USD.
For the first time, we are above the price corridor 30,000 – 40,000 USD, which has persisted for 11 weeks. 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 countermovement that followed the last failed attempt to break the 30,000 USD support zone came determined and shaped the current positive market environment. The continued bullish price action during the reporting week brought Bitcoin back to the area above the 200-day moving average.
The current price action reaffirms a resurgent positive momentum and, as suspected last week, suggests an imminent test of the 50,000 resistance zone. As long as price declines do not lead back to the zones below 42,000 USD, this scenario remains realistic.
Approaches of a healthy consolidation
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.
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 power 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 correction phase will be. Bitcoin had equally experienced setbacks of >50% in bull phases in the past. The price consolidated in the interesting 0.618 Fibonacci zone since the start of the bull market. Last week’s upward movement reduced or even negated the risk of a forming shoulder-head-shoulder formation. Sustained price action above the 40,000 support zone and a recapture of the 21-week moving average over the near term is required for a sustained positive picture. A “make it or break it” situation is expected from 52,000 USD. Here, the market decides whether a renewed attack on the all-time high should take place or whether the countermovement towards the all-time high ends in a “bull trap” as in January 2018.
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