- Crypto has been consolidating
- Bitcoin tracing 50 day EMA
- Central banks in focus
The Bitcoin market has been somewhat flat over the last couple of weeks, tracing the 50 day EMA which is quite typical of a market that is holding its breath and waiting for the next catalyst. These few weeks see interest rate decisions by a plethora of central banks, with over 30 of them looking to ease monetary policy. This supports the idea that alternative investments can move away from fiat currency rallying.
Consolidation and beyond
Consolidation is probably one of the most obvious ways to describe this market, but one thing that traders should be aware of is the fact that the market had rallied 170% recently. That’s an enormous move and the idea of grinding sideways for a couple of months after that is not out of bounds. In fact, it’s a sign that the Bitcoin market may be maturing enough to attract even more money. Hopefully, 20% gains in one day are going to be very common. That is the type of volatility that scares big money away from the market. Beyond that, it’s also a sign that the market can be easily manipulated, a point that charges have been bandied about for the last few years. The more liquid the market becomes, the less volatile it becomes, and the more stable it becomes. All of those are big in the eyes of the larger investors.
Technical set up
The technical analysis in this market is relatively flat right now, but when looked at through the prism of the last few months, it makes perfect sense. The question isn’t so much as to whether or not people are paying attention to the market but whether or not this is accumulation or distribution? It might be a bit of both, as those who got in at extraordinarily low levels are probably more than willing to take some of the profits off the table. However, the longer this market hangs about this area of the more likely we are to see fresh money coming into this arena.
The $9250 level underneath continues to offer plenty of support, and it is the bottom of the recent consolidation. Any sign of support in that area will attract a lot of people into the market to start buying. Ultimately, the $12,000 level above is massive resistance, and therefore it’s very likely that the sellers will defend it going forward. However, the measured move on a breakout above there could send this market looking towards the $14,750 level, which is just underneath the psychologically and structurally important $15,000 level, which makes quite a bit of sense. Essentially though, if we break down below the $9250 level we could probably go looking towards the $8000 level underneath which is the scene of the 200 day EMA. However, it still looks as if the buyers are willing to come in and defend, so the upside is still the most likely destination.
- Uptrend may have just been saved
- Resistance above observed
- Bitcoin has been acting like gold
The bitcoin bounce over the weekend was welcome news for traders, as we have seen a trend line break recently. Unfortunately, we still have the 50 day EMA just above, which could cause some issues, so we need to pay attention to that. All things being equal, it’s very likely that we will make a serious attempt at breaking above that level, as we are starting to reach towards major support levels.
The $9250 level has offered major support a couple of times in the recent past, and the fact that we have bounced from there over the weekend is a good sign. Although we had broken below the uptrend line that you see on the chart, the reality is that there was massive support just underneath there as well. This means the trend line break by itself wasn’t necessarily a reason to start selling. Even with that, it is not a good look.
If you reach back a few days into our analysis, you will see that we noted the $9250 level as crucial. The fact that we have held above there is the first hurdle cleared by the bullish traders to save the overall uptrend. This uptrend has been very reliable until the last couple of months where we have been digesting. Those gains are going to be crucial, but at this point I think it’s only a matter of time before we have to make some type of longer-term decision.
There is resistance above
There is resistance above in the form of the 50 day EMA, which is currently trading at roughly $10,100. Beyond that, there’s also the previous uptrend line, which could offer selling pressure. Ultimately, if we can break above both of those small hurdles, we can start looking towards the $12,000 level again. With the economic outlook as it stands, it does make some sense.
Global financial situation
Bitcoin has been acting a lot like gold lately, as people ran from various fiat currencies around the world with a slowing global situation, and the central banks were doing everything they could to bring down rates. As such, it is very likely that this market will continue to grind higher. Once we get above those resistance barriers mentioned earlier, we could notice an upsurge at that point.
The other argument of note is that, in the event of some good news – perhaps due to a more hawkish Federal Reserve than anticipated – that could send this market down to the 200 day EMA, which is currently hanging about the $8000 level right now. Regardless, we have a small $750 range or so that we are looking at as a deciding region to pay attention to. It is only a matter of time before we break out, and when we do, we could have a significant move.