The bitcoin market has rallied quite nicely during the trading session on Monday, breaking above the $11,700 level at one point during the day. Ultimately, the market is likely to go looking towards the 12,000 handle, which is where we have seen a massive breakdown from. Looking at this chart, we have just broken from what you could consider a bullish flag, and that bullish flag suggests that we are not only going to go looking towards the $12,000 level, but probably the recent highs.
The $11,000 level was previously resistant that we broke above, and it now should offer quite a bit of support. The 50 day EMA underneath that level is starting to reach towards that figure and should offer yet another reason why $11,000 should be important. Ultimately, I think that we will continue to see Bitcoin go back and forth in $1000 increments. The structure of the market is rather telling, as perhaps options are starting to come into play. Nonetheless, the $12,000 level is likely to continue to be a target in general.
Pay attention to the US dollar, because if it does strengthen that could work against the value of Bitcoin, but in general, we have seen a bit of divergence of that situation during the day on Monday. I think at this point, the Bitcoin market will continue to favor buying dips, as we have clearly seen people worry about the overall thought of the central banks easing monetary policy, and that should drive down the value of fiat in general, not just the greenback. Having said that, we could see this being used as more of an inflation hedge than anything else, which is something worth paying attention to as well.
If we were to break down below the 50 day EMA, then it is possible that the market could go down to the $10,000 level, but right now that seems to be a less likely scenario than reaching the $12,000 level, and perhaps even breaking above it. Once we do that, then we will almost certainly reach towards the $12,500 level, followed by a potentially bigger move. The 200 day EMA currently sits just below the $10,000 level and will offer a “floor in the market” from a technical analysis standpoint for traders.
