The market continues to look as if it is trying to recover, but that does typically take a lot of volatility and choppy behavior.
Bitcoin initially fell a bit on Friday to test the 50-day EMA, only to turn around and show signs of life. Ultimately, the market looks as if it is trying to recover, after a nice pullback. The pullback in Bitcoin does give us an opportunity to pick up a bit of value, assuming that we break out to the upside. If we can break above the 200-day EMA, then it would show momentum to the upside.
Alternatively, if we were to break down below the bottom of the hammer that formed for the session, it is possible that we could break down to test the $40,000 level. The $40,000 level is an area that has been important multiple times, so it will attract a certain amount of attention. I would anticipate buyers to show up there as well, and giving back the $40,000 level could end up being a relatively negative turn of events, perhaps reaching as low as the $35,000 level.
Bitcoin went back and forth over the last couple of days, and that does suggest that perhaps we are going to continue seeing a lot of volatility. It is difficult to imagine a scenario in which trading is going to be easy. Nonetheless, if we can break above that 200-day EMA, is likely that the $48,000 level will be tested, and then possibly even the $50,000 level.
Even if you do not trade Bitcoin, if you are a trader of crypto, all you need is to follow this market because it does have a major influence on what happens with the rest of the coins out there. The market continues to look as if it is trying to recover, but that does typically take a lot of volatility and choppy behavior, meaning that we need to respect position size, and of course leverage if you have access to it. Longer term, a move above the $51,000 level after recovery could open up more of a “buy-and-hold” type of situation. Keep the risk profile in the back of your head as well, because the Bitcoin market is far out on the risk spectrum, meaning people will need to feel comfortable taking risk in order to push this market higher.
