The Bitcoin market did very little on Tuesday after selling off quite drastically on Monday. By sitting still, we are trying to figure out whether or not the $40,000 level will be an area of importance going forward, perhaps extending all the way down to the $38,000 level. If we were to somehow break through all of that, it would be a very negative turn of events, and the fact that we have seen this market be so noisy means that it could very well happen.
Looking at the size of this candlestick is interesting to see that we have stopped dead in our tracks, so if we were to turn around and break above the top of the candlestick, the theory is that there would be buyers coming back into the market. However, the overall risk appetite out there is a bit dicey, to say the least, and that does no favors for Bitcoin. If we were to break down below the $35,000 level, I believe that the Bitcoin market will fall apart, and we could see a massive move much lower.
Alternately, if we can take out the 200-day EMA above, which would be near the $44,386 level, then the market is likely to go higher. At that point, we will probably threaten the $48,000 level, followed by the $50,000 level. That being said, this market looks like it is going to consolidate at best, so I think you have plenty of time to get involved with Bitcoin, because crypto in general looks soft, to say the least.
Ultimately, if you are a short-term trader, you may use the $40,000 level as an entry point or support point. At this juncture, I think the market is probably one you need to trade from a short-term standpoint, so I would be very cautious about trying to hang on to the move unless you are comfortable holding through “crypto winter”, which is a very real possibility at this point. The reaction over the last couple of days has really put a dark cloud over this market, so we will have to wait and see how this plays out but I do not necessarily see this chart as being as enthusiastic as it had been previously.
