Bitcoin markets rallied a bit during the day on Friday, reaching towards the downtrend line. The $4000 level got broken above, and it’s very likely that we would continue to see volatility just above, as the downtrend line will come into play, and of course the 50 day EMA which is even above there. It’s not until we break above the 50 day EMA that I feel we are going to be able to pick up significant momentum. What would be useful as if we had some type of good news coming out of the cryptocurrencies world, but quite frankly that doesn’t seem likely considering just how cryptocurrencies have been behaving for some time.
I suspect that a pullback from here makes a lot of sense, but one could make an argument for an inverted head and shoulders being formed at the moment. It is because of this that a break above the downtrend line should send this market higher, at least towards the 50 day EMA, and a break above there could send this market as high as $5000 if that inverted head and shoulder does in fact come true.
It has been very negative for quite a time, so bitcoin rallied a bit might make some sense, but the fact that we could not break through the downtrend line towards the end of the session does give me a bit of a pause when it comes to becoming bullish all of a sudden. I think the next couple of trading sessions will be very volatile, and of course very important. I still favor the downside but recognize that a substantial break of the downtrend line of course does suggest further bullish pressure.
