Bitcoin continues to build base
Bitcoin continues to build a base during the early hours on Thursday, as we are testing a crucial technical level. Beyond that, we also have the trend working in our favor right along with the actual price itself that we are sitting just below. All things being equal, this is a market that looks as if it is trying to build a base to grind higher and continue the uptrend.
The importance of the $10,000 level
The importance of the $10,000 level cannot be overstated. Simply put, this is a large, round, psychologically significant figure, and that almost always attracts a certain amount of attention. Large flows of orders from institutions and retail alike tend to be attracted to these levels, so that’s why you often see significant bounces or pullbacks from these levels. That being the case, it makes sense that we have struggled a bit to break above it, but I do think that once we clear the $10,000 level, the market is ready to go back towards the $12,000 level.
Not only do we have the 50 day EMA underneath lifting the market, but we also have the $10,000 level causing some issues. Beyond that, we have been in and uptrend and we have formed a nice-looking hammer for the previous session, so that show signs of life. Ultimately, Bitcoin has been rallying quite significantly for some time and it seems likely that it will continue to be the case.
The US dollar has also been under assault as the Federal Reserve is likely to cut interest rates. If they do in fact cut rates, that should drive down the value of the greenback, and of course that should make the idea of Bitcoin very attractive for traders as we will go looking to store value. If fiat currency continues to get hammered, it of course will help crypto itself. That being said, we may have a bit of a fight ahead of ourselves for the next couple of days. Once we get a significant impulsive candle, then we should get plenty of momentum going forward.
The trade going forward
Looking at the Bitcoin market, you can see that we have pulled back to test the 50 day EMA, formed a hammer, and now we are trying to break above the top of that hammer. This is classical technical analysis, meaning that other technical traders will be paying attention to this level. If we can break above that psychological figure, then the market is likely to go towards the $12,000 level, which has been resistance in the past. The overall attitude of the market is still bullish, even though we have pulled back a bit. That being said, if we were to break down below the hammer from the Wednesday session, it’s likely that we go down to the $8000 level. At that level, there should be plenty of support. Given enough time, we should have buyers come back into the market eventually. The future for Bitcoin looks relatively strong at this point.
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