Bitcoin pulled back from the $40,000 level again, which is a bit of a concern at this point because we have made several attempts to break above that level, but it looks as if we continue to struggle. The 200-day EMA is sitting just below the $39,000 level, and that is an area that I think a lot of people will pay close attention to. Because of this, I do believe that we may get a little bit of a push towards that area. Whether we can break down below the 200-day EMA is still a bit of an open question, but it should be paid close attention to if we do.
The main reason I say this is that it will almost certainly open up a move back down towards the $30,000 level, which is a large, round, psychologically significant figure that will attract a lot of headlines. Giving that level up would be a bit of a disaster for the Bitcoin market, and then by extension, crypto in general. Keep in mind that crypto has not decoupled from Bitcoin, so the ripple effects will be felt almost everywhere. In fact, I believe that if we break down below the $30,000 level, things could get rather ugly in short order.
On the other hand, if we turn around and break above the highs of the Tuesday session, that means that we will be challenging to reach towards the 50-day EMA which is currently just above the $44,000 level. Breaking that then opens up the possibility of a bigger move to go looking towards the $50,000 level, which is an area where we have seen a lot of support in the past, and it certainly looks as if it is going to continue to see resistance in that general vicinity due to “market memory.”
The one thing that you can probably count on is that there is going to be a significant amount of noise going forward, just as we have seen over the last several weeks. It looks as if we are trying to digest a lot of the latest news as to which direction we are going. In the meantime, we are still in the same region that has been so important more than once. Because of this, I think we will continue to see noisy and difficult conditions for short-term traders. Waiting until we break out of this $10,000 range is probably the most prudent way to trade this market.
