Bitcoin pulled back a bit on Monday to kick off the week, initially rallying above the $24K level before dropping hard later into the day, falling alongside equities down to the $22K level before bouncing to finish the day slightly positive. This is a big Doji candle, and while it is bullish by definition, the fact that it's occurring up at a new ATH following a massive 2-3 month rally indicates that Bitcoin may soon revert back to the mean a bit, pointing to a short-term pullback.
(December 21, 2020 7:30PM EST)
Interestingly, equities sold off today alongside gold and crypto, indicating a possible top forming in traditional markets and a local one in crypto. Bitcoin is going higher in the med-long term, however, it is a bit overextended on shorter-term charts. BTC did just have a large rally again, so it a retracement in the short-term may make sense.
For this recent rally up to ~$24K, I think a pullback to the 61.8% or maybe 78.6% fib levels may make sense, though I don't think BTC will retrace that deep.
Going forward, we've got a tremendous upward bias with a tidal wave of institutional money inflows coming on board by the day, retail sentiment turning bullish, a diminishing supply, and a massively inflating fiat currency pair. Fundamentally, Bitcoin is a strong buy and hold in the medium-long term. Short-term, you're chasing the trade here. Objectively, it might be best to wait for a pullback and buy value - easier said than done during a strong, record-shattering rally and FOMO surging all around. Patience will be key here - we know the trend of this market - it's convincingly bullish from here on - it's now a matter of adding to your position with a smart entry. We had 3 years to buy between $3,200 and $10,000, now anyone who wants to buy Bitcoin is paying a premium for lower risk.
Support: From here I think $18K should be support as it has a couple of times over the past month, but more importantly will be if this impulsive rally continues on, in which case a pullback to the former resistance level -- $20K -- would step in as a new support level. What a tremendous turn of events. If that's the case, then BTC is ready for another wave higher and puts in a major higher low on the longer-term charts.
Resistance: We're in uncharted waters here, but I think now that BTC is well into the five figures, it'll move in either $2,000 or $5,000 increments. Accordingly, my target is $25,000 which is a nice large, round psychological number, or possibly $30,000. From there, we'll look for exhaustive candles indicating Bitcoin is running out of steam and then look for support levels to target for dips to buy. Bitcoin's going higher - no sense in trying to fight this trend.
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