Bearish View
- Sell the BTC/USD and set a take-profit at 37,000.
- Add a stop-loss at 42,000.
- Timeline: 1-3 days.
Bullish View
- Set a buy-stop at 39,500 and set a take-profit at 42,000.
- Add a stop-loss at 37,000.
The BTC/USD pair jumped to above 39,000 for the first time since January 22nd as the recovery continued. It is trading at 39,000, which is almost 20% above the lowest level in January this year.
BTC Rebound Continues
The BTC price has rebounded even as the negative sentiment in the market remains. Indeed, while Bitcoin has bounced back, it has been in an established downtrend for about 83 straight days. At the same time, the coin’s negative sentiment has jumped, according to data compiled by GlassNode.
The company’s report also noted that the volume of Bitcoin traded in the futures market has been in an overall downward trend in the past few months. It surged to an all-time high of $80 billion per day in March last year to about $40 billion in January. Still, open interest in the futures market has been relatively strong.
While the futures market has been under pressure, on-chain data have been relatively positive. For example, wallet growth has been in a bullish trend in the past few months. Indeed, the number of non-zero wallets have risen, signaling that activity has been robust lately.
The number of transactions in the Bitcoin market has been strong. For example, transactions worth about $10 million have been rising recently. Therefore, some analysts believe that using the Network Value Transaction (NVT) ratio signals that Bitcoin may be about to bottom.
The rebound of BTC/USD pair has coincided with the overall strong performance of American stocks. After going through its worst January in more than a decade, stocks have been relatively strong this week. This performance is mostly because of the strong quarterly results by companies like Microsoft and Alphabet.
BTC/USD Forecast
The four-hour chart shows that the BTC/USD pair has been in a strong bullish trend in the past few days. The pair managed to move to the upper side of the rising wedge pattern that is shown in black. It has also moved slightly above the 23.6% Fibonacci retracement level. Most importantly, the pair has moved above the 25-day and 50-day moving averages.
Therefore, with the wedge pattern nearing its confluence level, there is a likelihood that the coin will retreat later this week. If this happens, the key support level is at 37,000. A complete break above the upper side of the wedge will push it to the 50% retracement at 42,600.
