Bitcoin rallied on Monday to start off the week, bursting higher and breaking through the $19,000 level, eventually closing the daily candle at around $19,300. This is of course a bullish candle to start off the week as Bitcoin closed the weekly candle on a bullish note following a positive weekend rally that recovered most of last week's grind lower. If this is indeed Bitcoin bouncing off support, then perhaps we already got our shallow rally and Bitcoin is ready for another leg higher, possibly above the ATH at just under the $20K level.
(December 14, 2020 7:30PM EST)
If Bitcoin were to continue higher, it will need to retest the marginal new ATH set a couple of weeks back which is just a hair underneath $20K. If Bitcoin breaks above that all-important psychological resistance level, I think it will trigger a bunch of stop-buy limit orders for people looking to "buy the breakout." If this happens, Bitcoin's price could lurch higher a few thousand dollars or maybe more -- almost certainly inducing a spell of FOMO which has been so captivating to retail crypto investors before. I think that could send Bitcoin up to the $25K or maybe even $30K level before running out of steam, as FOMO doesn't last long before a sizable retracement. However, a retracement closer to the $20K would be an excellent entry or re-entry point as previous resistance typically becomes support, and Bitcoin should then go on to higher prices never seen before.
However, if Bitcoin gets rejected by $20K again and this rally fails like the others, I think a more sizable pullback is in order, down to the $16K level which is supported by the 50 Day EMA and the late Thanksgiving week support area.
The interest scenario to play, which is very possible, is if Bitcoin trades sideways from here for a bit, oscillating between the $18K - $19K range for a week or so but with higher lows. This would indicate to me that Bitcoin is preparing to breakout to the upside. Given the enormous amount of pressure building as institutional inflows look to multiply Bitcoin's market cap over the next decade -- hell, even the next couple years, the long-term path of resistance is definitely higher.
Support: I'm still looking for a short-term pullback, most likely retesting the $16,000 level as support. However, if Bitcoin has indeed put in a new local lower high at around $17,500 last week, then ~$18K may be the new (temporary) support. I don't put a ton of stock into that scenario, but we'll have to see how it plays out. I feel better about medium-term support being raised to $16K -- which, if you look at the chart two months ago -- is a huge increase. I'm a buyer on dips, hoping for "deeper" pullbacks to major support levels -- though I'm not sure if we get there.
Resistance: $20,000 is long-term resistance and has been for nearly three years now. Bitcoin’s not far off, but I think in the short-term, the path of least resistance is lower. Ultimately, I suspect 20K will be breached by no later than Q1 2020, then we’ll be talking $25,000, $30,000, and higher.
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