Bitcoin pulled back from the 50-day EMA indicator on Monday, as we have seen a lot of volatility in this market. It appears that Bitcoin cannot take off to the upside, and it is interesting that the 50-day EMA is starting to slope lower so it will be worth watching to see whether or not we break back down below the $40,000 level.
The $40,000 level is a large, round, psychologically significant figure that a lot of people will pay attention to, and it is worth noting that it has been a bit of a “magnet for price” as of late. Because of this, I think a lot of action will be centered right around that region. The market will continue to be very noisy in general, but what is worth noting is that Bitcoin has not been able to threaten the top of the overall consolidation area.
Looking at this chart, you can clearly see that the $45,000 level is significant resistance, as it has not only been proven a couple of times recently, but we also have the 200-day EMA sitting there as well. You can also say that the $35,000 level has offered significant support previously, as we had formed a bit of a “double bottom” in that region. Smack dab in the middle you have the $40,000 level, so you could think about the $40,000 level as essentially “fair value.”
At this point, it is very likely that the market will continue to grind sideways overall as Bitcoin has no real catalyst to go higher. If we break out of this box, then it is obviously going to be a signal that we are going to make a significant move, considering that we have been trading in this area for so long. One thing that can be said about this consolidation is that the longer it lasts, the more likely it is to end up being bullish. In other words, traders are getting used to the idea of getting involved in the market again. However, if we break down below the $35,000 level, the $30,000 level will probably be targeted almost immediately. The breaking out that level to the downside would be catastrophic for this market and send Bitcoin into “crypto winter.” A break above the $45,000 level could open up the possibility of a move towards the $50,000 level.
