Bitcoin Weekly Analysis

Last week we said: 

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. 

Our prediction of continued consolidation between support and resistance levels was correct, as BTC has ranged between $37k and $40k for most of last week. We also warned of extreme volatility surrounding black swan events, and last Wednesday, Feb 24th the market experienced a crash to $34k as Russia invaded Ukraine. Since then, investor fears have lessened and the market has recovered. At the time of writing, BTC is testing resistance between $40-41k. 

Let’s look at the charts and try to identify trends for the week.

Bitcoin Price Analysis

On the 4H chart, BTC is forming a clear inverse head and shoulders pattern, indicating that the bottom may be in. We also see a spike upwards as a huge green candle rockets up to test the 100 and 200 4H SMAs. This also establishes the 4H 50 SMA as support, currently at $38.2k. 

This bounce is a momentum shift upward on the stochastic, pushing the RSI toward overbought. I expect the RSI to move up to the top of the purple zone on this move. 

We can see on the daily chart that the 50 SMA is an important resistance zone. If BTC closes the day above the $40.2k mark, this could be retested and confirmed as support. The 100 SMA will act as a resistance level at $45k. 

We see a similar pattern here as on the 4H chart. A Stochastic bounce is pushing the RSI back to neutral currently. 

After finding support on lower timeframes, the weekly Stochastic bounce remains intact. Again we have a fractal forming on lower to higher time frames. What happens next on the 4H and Daily could indicate longer term moves. 

Bitcoin Investor Sentiment

Despite the market catching support, sentiment is still extremely fearful. This is a hidden bullish divergence, as fear levels remain high – indicating a good buying opportunity. 

Bitcoin Fundamental Analysis

Glassnode reports just now that those who bought the top of the Bitcoin market have capitulated, indicating that the worst of sell pressure has passed. Long term holders continue to accumulate. 

Conclusion

Bitcoin seems to be making a break upward. The daily close over the next few days will be critical to see if the $40k zone can hold as support. A bullish divergence RSI pattern is forming, with fractals showing the same pattern on both low and high time frames. Strong accumulation patterns and reduction in sell pressure confirm this bullish bias. 

Support Zones: 

  • $40k (local)
  • $36-37k (historical)
  • $33k (historical) 

Resistance Zones

  • $41k (local)
  • $45k (daily 100 SMAA)
  • $50k (psychological)

Not investment advice. Do your own research.

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