Bitcoin rallied significantly on Friday to show extreme strength again, as we find ourselves testing the $48,000 level. With this being the case, it is likely that we will continue to see another attempt to go higher. The $40,000 level is the beginning of significant resistance though, so that is something that should be kept in the back of your mind.
Above the $48,000 level, we then have the $50,000 level, which could cause noisy behavior, as it is a large, round, psychologically significant figure. After that, we also have the $52,000 level, which is where we had begun this entire pullback from. Because of this, I think it is only a matter of time before we have to test that area in order to determine whether or not there is further downside to worry about, or if the selling is finally done.
If we were to break above that $52,000 level, it is very likely that Bitcoin will explode to the upside, perhaps going towards the $60,000 level over the next several weeks. That being said, it is going to take a significant amount of momentum to continue to go in this direction for very long, so I think the most likely of outcomes in the short term is going to be a little bit of a pullback that value hunters may be attracted to. The 50-day EMA underneath is a likely area of support, sitting just above the $44,000 level. After that, we also have the 200-day EMA creeping up on the psychologically significant $40,000 level as well. In other words, somewhere in that general range I would anticipate a lot of value hunting going on.
I think you can count on a bit of choppiness. It will be interesting to see how this plays out, but it certainly looks like it is trying to recapture the bullish form that it had just a few months ago. What I do like about this is that Bitcoin has done fairly well in the face of the US dollar strengthening in the past, so it is starting to ignore possible Forex headwinds. Because of this, I think that it is probably only a matter of time before we see an impulsive move that we can follow. If we were to break down below the 200-day EMA, that could send this market crashing, but over the last couple of days the odds of that have gone down drastically.
