Bitcoin rallied on Monday to kick off the week, reaching up above the $28,000 level to print a new ATH, local high, and higher high in this developing bull market. However, as Bitcoin got above $28K, it sold off precipitously, dropping almost $2K before recovering to form a bullish candle with a long wick above. This is a bullish look but indicates Bitcoin may be getting a bit stretched at this altitude, though we've heard that one before.
(December 28, 2020 7:30PM EST)
Bitcoin hit another ATH before pulling back, starting the day with absolute strength and finishing it on a weaker note. This is not bearish, though one has to wonder when Bitcoin will pull back if it will pull back anytime soon. I tend to think Bitcoin has no reason not to at least touch $30K before making a significant corrective, if at all. It's entirely possible that we could see a run up to $40K - $50K by the end of H1 2021. I don't think it's the most likely scenario, but I certainly wouldn't bet against it. In the meanwhile, I think Bitcoin probably grinds a bit higher before ultimately making a retracement to the low $20,000s, which would likely mark the last opportunity to board the train before it really gets going to higher five figures and probably six figures.
For now, I think BTC probably finds resistance around $25K or maybe $30K if it really gets going in the short-term. We are a bit overextended but there's simply too much demand and supply constraints to justify a major price correction less a black swan. The risk here is not buying too high - it's selling too low or worse: shorting, which will inevitably nuke anyone's account.
Support: Look for support around the 23.6% Fibonacci retracement level around $25K, the 50% fib around $22,300, and ultimately the 61.8% between $20K - $21K. Bitcoin continues to make higher highs and with demand high and growing and supply small and evershrinking, this is the perfect storm for higher prices. I don't forsee many scenarios where Bitcoin makes a substantial pullback at this point, but if it does, consider that a gift. Anyone who can buy around $20K or lower at this point is getting good value in the medium-long term here.
Resistance: We're in uncharted waters here, but I think now that BTC is well into the five figures, it'll move in $5,000 increments. Accordingly, my target is $30K and then will be watching for signs of BTC to be running out of steam. However, we may not see large corrections at this point, maybe only $5K or so. Bitcoin's going higher - no sense in trying to fight this trend. Above $30K, look for resistance again every $5K: $35K, 40K, 45K, and then $50K. After that, we'll probably move in $10K increments.
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