Bitcoin had a wild day on Friday, swinging up to a new ATH around $42K and dropping down to the $36K level before bouncing to close the week slightly positive around $40K. This is a large Doji candle with long legs on both sides, indicating a lot of volatility on the buy-side and sell-side. This Doji candle, indicating a possible trend reversal, comes at a sensible price level as Bitcoin appears to be finding resistance and be ready for a corrective pullback.
(January 8, 2020 7:30PM EST)
Bitcoin went back and forth on Friday to end a very volatile day slightly in the green, printing another new ATH just north of the $40K level. This is bullish, however, I think Bitcoin's a little overdone to the upside and might be getting a little top-heavy here in the short-term. Markets can't go up forever as Bitcoin has seemingly since October, and outright since December. Consider this a good thing, though, as you'll get a chance to buy the dip depending on how much Bitcoin corrects, which may not be a ton frankly. From here, Bitcoin could absolutely continue upwards on fumes for a blowoff top to $45K - $50K, however, I think that resistance will only build from here as we approach a major milestone and psychological resistance level at $50K. So basically, if not now, then soon.
Of course, I could be wrong (we're absolutely going higher eventually, just maybe not this second) and Bitcoin could rocket higher to $60K in a week on the back of a national government adding Bitcoin to its treasury - who knows. My point is simply to buy on dips, dollar-cost average on a regular basis, and even earn Bitcoin if you can. The path of least resistance is up; don't try to fight it unless you're a degenerate gambler willing to get burned.
At this point, I'd put support around $30K with stronger support around $20K - $25K. There will be a retracement at some point, possibly soon, as equities gold sold off today, adding to the suspicion that a top is in and a pullback is starting. This comes as the DXY (US Dollar) rallied a bit, showing a degree of support and possibly ready to move higher after months of being pummeled. Of course, if you've read my analyses before, you know how Bitcoin and the US Dollar are correlated. I think a ~30% dip makes sense as Bitcoin has done many times before during bull markets which would put us around $28K.
You simply can't short or even sell this market when all it does is go up over time. Sure, there are short-term fluctuations, but long-term there's no sense in missing out on this ride. This is truly the trade of the decade: if you're not in Bitcoin, chances are you'll be getting much worse returns elsewhere.
Support: Look for support around $30K and then $25K. Anything lower than that is a screaming buy, though I'm not even sure we'll see $25K again.
Resistance: Keep an eye on price action around 40K; if BTC experiences some trouble and gets rejected there multiple times and it seems like the dips are bought less and rallies are faded, then I think we'll see a bearish sentiment shift and a correction will ensue. If Bitcoin breaks above $40K, look for $45K, and then $50K. After that, we'll probably move in $10K increments.
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