Ultimately, it looks as if we are trying to go higher, but there is a lot of work to do.
Bitcoin has rallied a bit during the trading session on Tuesday to reach the $41,250 level. If we can break above here, then the market is likely to go looking to reach the 50 Day EMA, which is at the $42,500 level. A break above that then allows the market to go looking to the 200 Day EMA, which is currently at the $42,000 area. Keep in mind that Bitcoin is highly technical, so it is likely that we will continue to see plenty of buyers based on what we have seen as of late.
The hammer from the trading session on Monday suggests that we are going to continue to see plenty of buyers near the $40,000 level, and this makes a certain amount of sense considering that it is a large, round, psychologically significant figure, and an area where we have seen action previously. However, over the last several months we have seen this market sliced back and forth through that level, so it does make a certain amount of sense that we would see the $40,000 level lose some of its efficacy.
The hammer from the Monday session is rather impressive, and I think that is a bit of a gateway to the uptrend. If we were to break down below the bottom of that hammer, then I think it allows Bitcoin to go down to the $37,500 level, perhaps even down to the $35,000 level underneath that had also been rather supportive. I do believe at this point the market is likely to see a lot of pressure to the upside, but if we were to break down below there, it could open up the possibility of a “crypto winter”, which is when crypto does almost nothing for the longer term.
I do believe that given enough time the Bitcoin market is trying to form its basing pattern, and therefore I think that it is going to be very noisy and choppy, but the market is going to continue to see a lot of noisy behavior. Remember that Bitcoin is far out on the risk spectrum, and therefore we need to see more of a “risk-on world” to make the Bitcoin market really take off to the upside. Ultimately, it looks as if we are trying to go higher, but there is a lot of work to do.
