Bitcoin continues to press resistance
Bitcoin continues to show resiliency, which is a continuation of a bottoming pattern that we had formed. With that in mind, the candle stick for the Wednesday session is quite telling, as we pulled back rather rapidly only to turn around and show signs of life again. The hammer shaped candle suggests that there is real tenacity when it comes to try to break out to the upside, and we are testing a major level of resistance so that is also a very good sign.
Major resistance above
The $6000 level of course is going to be major resistance based upon the longer-term charts. That was an area that had showed a lot of support in the past, as it held the market up for about nine months. The fact that it was so important in the past suggests that we will continue to see significant resistance. At this point, if we break out above the $6000 level on a daily close, and perhaps even a little bit higher than that, then the market will be free to go much higher. Ultimately though, this is a major area to break above so it’s going to take quite a bit of momentum to finally shoot to the upside.
Pullbacks at this point should continue to find support underneath though, so obviously this is a market that I don’t have any interest in shorting. After all, the up trending channel has held quite nicely, so ultimately it’s a scenario that it’s only a matter time before buyers return. In fact, I prefer pullbacks so we can pick up value.
The natural continuation of a bottoming pattern
When you zoom out look at the chart, we had formed a nice rounded bottom near the $4000 level, which is a longer-term bottoming pattern. The next major scene of conflict is going to be the $6000 level. Quite frankly, if we can clear this area it’s likely we could pick up a few thousand dollars. It’s not going to be easy, but it certainly looks as if the market is hell-bent on trying to get above there.
Because of the natural bottoming pattern, and the trend change in the way it has, I fully anticipate that the $5000 level is now the “floor” in the market, especially considering that the 200 day EMA is in that neighborhood as well.
The plan going forward
The plan going forward of course is to pick up Bitcoin every time it dips, in little bits and pieces. Quite frankly it wouldn’t surprise me at all if it took several attempts to get above the $6000 level so I don’t necessarily feel like I need to be in a rush to accumulate a larger position. However, if we get a daily close well above the $6000 level, perhaps somewhere near the $6200 level, then we are in the next phase of the market and I would start buying there as well. It’s not until we break down below the $5000 level significantly that I would remotely entertain the idea of shorting, and even then I would have to think about it.