Bitcoin Looks Likely to Fall
When I look at this chart, it’s obvious that there are a lot more resistance areas above than there are support levels below, so I think Bitcoin will continue to struggle.
The Bitcoin market initially tried to rally on Tuesday, but gave up gains to form a bit of an inverted hammer. The inverted hammer suggests that we may be attempting to break below the previous session’s hammer, which means we could see some downward momentum pick up again. The $37,500 level is an area I have been talking about for a while, and we could test this area soon. Going below this level would be negative for the market.
If we get this breakdown, Bitcoin will likely be looking to hit the $35,000 level. This is an area where we’ve seen quite a bit of support in the past, and I think it would be interesting to see the bulls jump in and whether or not they can defend Bitcoin at this point. If we don’t have the strength to hold above that level, then I think it’s likely to lead to a fresh flood of selling when it comes to Bitcoin, and perhaps crypto in general.
The other side of the trade would be if we could exit the $40,000 level on the upside on a daily close. This would be the very first sign of market strength that you should pay attention to. After that, we would need to see the market break above the 50-day EMA, which currently sits around $41,500. After that, you then have the 200 day EMA kicking in as the 43,700 level is currently where it is. Beyond that, we then have the $45,000 level which has been an important resistance and could be a tough hurdle to overcome.
When I look at this chart, it’s obvious that there are a lot more resistance areas above than there are support levels below, so I think Bitcoin will continue to struggle. Signs of exhaustion after short-term rallies could also be selling opportunities for those willing to go short. For longer term traders, you probably have plenty of time to build a position, and so I wouldn’t be worried about jumping in just yet, as these types of consolidations tend to take a while. Additionally, the US dollar continues to work against its value, therefore I think it is likely that we will continue to struggle.