Last week we said:
The market looks likely to continue consolidating between support and resistance. Fundamentals take a back seat with multiple black swan events on the horizon. As such, trade with extreme caution during this time.
This week we will begin with the same warning as last week: trade with extreme caution during this time. The threat of war in Europe has caused all markets to move to risk-off, causing risk assets like BTC to decline back to support levels as a result. This coincides with our prediction that BTC would continue to range between support and resistance, and not move up so quickly.
Let’s take a look at the charts and see if we can identify support and resistance levels for the week.
Bitcoin Price Analysis
BTC retraced to its $40k support on the 4H chart and fell below to about $38k. Wicks down confirmed rising support at about $37k. As you can also see, the 4H 50 SMA has crossed below the 4H 100 SMA. I now expect the 200 SMA at $40k to act as resistance in the short term.
The RSI is moving up on this time frame, but the stochastic looks ready to retrace. We may see another dump to $38k or even the $37k support level.
Looking at our daily moving averages, we can now see a death cross pattern has fully formed. BTC’s price has retraced to our local support zone as established a few weeks ago. The Daily 50 SMA is now expected to act as resistance – currently at $41k.
The RSI is leaning toward oversold, but the stochastic looks exhausted and in need of a rebound on this timeframe. From this perspective, a bounce back up to resistance levels looks likely – especially once war FUD subsides.
The weekly RSI failed to break above its 14w moving average and is currently back down to the 40 level. If BTC returns to the $30-33k zone, it will likely be at the same historically oversold levels on this timeframe that we saw a few weeks ago. The stochastic is sending mixed signals, but momentum is not lost yet.
Bitcoin Investor Sentiment
The market is back to “Extreme Fear” as markets risk-off due to war fud. We always say – it’s a good idea to be a contrarian trader and buy when fear is at its worst. This is no exception.
There is a hidden bullish divergence here. The market was at “extreme fear” at $33k and is now at extreme fear at $38k. This means we have a rising sentiment window, as fear will bottom out at higher and higher prices.
Bitcoin Fundamental Analysis
Just like last week, fundamentals take a back seat when black swan events are visible on the horizon.
That said, glassnode data shows that long-term holders continue to accumulate Bitcoin at these discounted prices. The ones realizing these losses are short-term holders, who will run out of Bitcoins to sell soon enough.
BTC has continued consolidating and will likely keep doing so. $40k and $41k are now resistance levels, and $36-37k is a newly established support. Trade with extreme caution over these next few weeks until we have a clearer picture of geopolitical tensions.
Not investment advice. Do your own research.