Last week we said:
Finding support at $38k was critical. If $38k support fails, BTC will test the $35-36k zone. If it holds, I expect BTC to retest $40k and eventually $45k. On larger timeframes, such as the weekly, BTC looks very ready for a bounce. This is also the case on the 4H. However, on the daily – a push downward looks more likely.
After our article last week, BTC did indeed go on to retest $40k resistance. This resistance level broke, with BTC rising all the way to $42k. However, upon moving down to retest the $40k level as support, it failed and broke back down. Then, BTC went on to test our support zone of $38k, which broke briefly but did not close below that level.
This continues a range of sideways consolidation that we have seen for BTC at this price level for the past several weeks. A wedge pattern seems to be forming, as BTC is minting a series of higher lows and lower highs.
Let’s take a look at the charts and see if we can identify BTC’s support and resistance zones for the week.
Bitcoin Price Analysis
On the 4H timeframe, BTC’s moving averages are back in a bearish configuration. The 50SMA has acted as short term resistance on a few wick tests, currently at $39.2k. If this level breaks,
On the 4H chart, the RSI is completely neutral but the Stochastic looks overextended, making it likely that we see a break downward in the short term. Short term support is between $36.5k and $37k, with wick support at $34.5k.
On the daily, resistance will be at the 50SMA and 100SMA – located at $40k and $42.9k, respectively.
On the daily chart we see a different story from the 4H. Here, the RSI is neutral but the stochastic looks ready for a bounce up.
Lastly, on our weekly chart, we can see the 50SMA is at $46k which will act as resistance. The RSI continues to look oversold as the stochastic inches upward.
Bitcoin Investor Sentiment
Bitcoin investor sentiment persists in “Extreme Fear” as it has for the past two weeks. As usual, this indicates that fear is likely already priced in to the market and is a good buying opportunity. Of course, this is not without risk.
Bitcoin Fundamental Analysis
Despite all the bad news in the market and bearish indicators, fundamentals continue to strengthen.
Glassnode reports that Bitcoin’s supply is becoming increasingly illiquid. If this continues, a sell-side liquidity crisis is forming that could send BTC’s price skyrocketing. These are the foundations of the next bull market forming right in front of us.
Fundamentals are strong and sentiment is down, which are long term bullish indicators. Short term price action (4H) looks bearish, while daily looks bullish and weekly looks neutra/bullish. Bitcoin can continue consolidating, possibly wicking down to low supports before bouncing back into our consolidation zone.
- $38k (local)
- $36.5-37k (4h support)
- $40.5k (4H)
- $42.9k (daily)
- $46k (weekly)
Not investment advice. Do your own research.