The bitcoin market has initially tried to rally during the trading session on Tuesday but gave back the gains rather quickly as the US dollar had gained quite drastically. The market is looking a bit tired at these high levels, but at this point in time it should not be a huge surprise due to the fact that bitcoin has gone straight up in the air. The market breaking above the $40,000 level was the beginning of the latest push higher, which measures for a move towards the $50,000 level.
Keep in mind that the $50,000 level will attract a certain amount of attention, as the nature of the large, round, psychologically significant figure causes support and resistance. If we do break above the $50,000 level, then it opens up the possibility of a move towards the $60,000 level. That being said, I think that we would probably see a little bit of a pullback from that area regardless, as I simply do not see the market slicing through that level as if it was nothing. You can see that it was previous support, and as a result it should have a certain amount of resistance built in due to “market memory.”
Bitcoin has of course been a way for people to get away from inflation, but with the US dollar strengthening during the day we have seen the market pull back in favor of the greenback. I do not necessarily know that we pullback for a bigger move, but it is possible that if we see a huge move in the greenback that we could see a huge move in this market. The $40,000 level underneath should be support, as it is another area that we should see “market memory” come into play. The 50 day EMA is reaching that area and turning higher, so it does suggest that it should be rather supportive. I think at this point in time, the market will find plenty of reasons to go long, unless of course we see a complete “risk off” type of situation. All things been equal, this now looks as if the market is going to try to go to the highs over the longer term, but obviously we will not get there in a straight line. Expect choppy behavior but dips at this point in time should still be thought of as potential value.
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