The Bitcoin market initially tried to rally during the session on Tuesday but gave back the gains to show the $40,000 level as resistance yet again. In fact, we are lower than we were at the close on Monday which is not a good look. The 50-day EMA is sitting just below, so I think it could very well see further noise in that area as it typically offers a bit of support.
Underneath the 50-day EMA we also have the 200-day EMA, so both of those could come into the picture to offer supportive action. However, if we break down below the 200-day EMA it is likely that we will test the $35,000 level before breaking down to the $30,000 level. If we do all of this, it would simply be a continuation of the overall consolidation that we have been in for a while, so I do not necessarily think that it would be a big deal one way or the other. The real question is whether or not we will stay within the consolidation area?
The main reason I asked this question is that if we see this market roll over and start breaking down, then it would be a very negative turn of events considering that we tried to break out. The market not being able to break out after the huge move that we had made previously would set up the potential of a selloff and a breakdown below the $30,000 level. At that point, my target would be $20,000, as the measured move plays out to that target.
On the other hand, if we can break above the highs of the Monday session, then it will allow the Bitcoin market to go looking towards the $50,000 level, which is a large, round, psychologically significant figure and an area that would attract a lot of attention in and of itself. It was previously support, so “market memory” could come into play and offer resistance. Regardless, Bitcoin needs to make a move soon or it is more likely than not to break down. Keep in mind that the US dollar also comes into play, so if that surges in strength then it could work against the value of Bitcoin in this pair as well.
