Bitcoin initially fell on Wednesday but then turned around to show signs of support. We ended up forming a little bit of a hammer, right after the neutral candlestick from the previous session. That being said, the market looks as if it is going to continue to hang around the 50 day EMA, which of course is a major technical indicator. I think that we will continue to hear a lot of noise in this general vicinity as we also have the 200 day EMA sitting just above there. In other words, there is a lot of technical confluence that people will be paying close attention to.
We have had a nice bump higher, but at this point we are probably a bit overbought. Keep in mind that the CPI numbers coming out of the United States will continue to be important to pay attention to, because we are concerned about whether or not there is going to be strong inflation that has the central bank acting aggressively when it comes to monetary policy. If that is going to be the case, then it will be very bad for risk assets such as crypto. On the other hand, if inflation tames, that would be very good for risk assets as the central bank may not need to tighten as much as originally thought. If that is the case, then we will probably slice through the 200 day EMA and then go looking towards the $50,000 level.
Underneath, the $40,000 level will more than likely be supportive, as it was previous support and resistance. Given enough time, I think the market will eventually make up its mind, but this has been a nice little bounce. I think it would make a lot of sense at the very least to see a bit of a pullback, but crypto has its own mind at times, and it simply goes straight up in the air. That being said, it is not until we get the CPI announcements that we probably have the next important move. I do believe at this point we will continue to see a lot of volatility, so at the very least I would keep my position size reasonable over the next day or two.
