Bitcoin is showing some signs of strength again after having its deepest pullback in the last few years. From its peak near $20,000 down to the recent low near $6000, Bitcoin’s value declined by about 70%.
Bitcoin is not out of the woods yet but is starting to look a bit more bullish in this recent analysis, breaking through a downward sloping trendline shows a change in price behavior. We have also seen some strength in the broader cryptocurrency market recently.
From its low of $6000 Bitcoin is now above $11,000 an increase of 83%, but needs to increase another 80% to reach its all-time high at $20,000. Before it reaches that level, Bitcoin will need to overcome various levels of resistance.
Let’s take a look at Bitcoin on multiple time-frames, and see what the price action is telling us:
BTC/USD – Weekly Chart
We can see on the weekly chart that the price is just starting to break above a downward trendline which is a bullish sign.
We can also see that support was found near the 40-week simple moving average (SMA) before this move higher, so this is a key area to watch in future. The price is also back above the 20-week SMA and if it can regain its 10-week SMA that would be another bullish signal.
The bearish scenario from here is if the price starts moving back down towards the 200-day SMA on heavy volume and breaks below it.
BTC/USD – Daily Chart
Bitcoin is right at the 50-day SMA here and just breaking out above the sloping trendline. A strong breakout here on heavy volume would be more bullish, however, the price is slightly extended here since breaking out from an inverted head and shoulders pattern so may be due a rest.
The inverted head and shoulder pattern is just about visible on the daily chart, but much clearer on the shorter timeframes.
Price could consolidate here a little before moving higher above the 50-day SMA and reaching the 100-day SMA. Even if price pulls back a bit it’s not too bearish, as long as we don’t see a strong move back down to the 200-day SMA on heavy volume.
BTC/USD – 4-Hour Chart
You can see the inverted head and shoulders pattern much clearer here on the 4-hour chart, where the neckline breakout would have provided a great entry point for a trade.
Price is just starting to break above the downward sloping trendline. If it continues higher here the next resistance level is at $13,000. You can see on the chart that the $13,000 level has been an area support or resistance multiple times recently. If the price pulls back before reaching $13,000 look for the downward sloping trendline to become support.
If the price can move above $13,000 the next resistance area would likely be $17,000 then the all-time level near $20,000.
Key areas to watch:
- $13,000 & $17,000 – Price targets and resistance areas for Bitcoin to overcome.
- 50-day SMA – Bullish if price moves and stays above it
- 200-day & 40-week SMA – Bearish if the price moves down below it.
- Sloping trendline – Bullish if the price stays above it, could become support.
- $20,000 – Longer-term price target and all-time high price.
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