Bitcoin rallied a bit on Tuesday, initially falling a bit before turning around to form a bit of a bullish hammer and closing the day at just under the $27K level. This is a bullish continuation candle following a larger candle yesterday to kick off the week, as Bitcoin looks to hold onto its gain as it looks to move higher. Better to hold onto gains and digest them than to give them right back and have to work for them again.
(December 29, 2020 7:30PM EST)
Bitcoin grinded a little higher on Tuesday, bouncing off a small pullback to $26K and finishing the day in the green around $27K. Bitcoin is undoubtedly in an uptrend and a bull market, but right now the question has to be whether Bitcoin already printed a local top at ~$28,500 or if's still got higher yet to go before any meaningful correction. I still think BTC eventually corrects to the downside a bit, although at this rate it doesn't seem that it'll be that deep of a drop. That being said, I'm a buyer on dips and will look to buy at support levels as BTC gets closer to $20K again.
If BTC continues up, $30K is next followed by $35K and then up in $5K increments to $50K. If BTC pulls back, then I think a move to somewhere between $25K - $20K makes sense, though even $20K might be out of range at this point. You can't be mad as we've all had 10+ years to accumulate at sub-$20K prices. Right now buyers are paying a premium for lower risk, which is natural market behavior, but also a reminder that you can't be afraid to buy during bear markets or when prices are lower just because sentiment is negative. Fundamentals and macroeconomics have and clearly continue to play important roles in investment markets and asset prices, and will continue to do so.
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 ever shrinking, 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: 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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