Outlook: Bitcoin rallied slightly on Thursday, grinding higher as Bitcoin resiliently holds onto its ATH zone, now only a few hundred dollars below its marginal new ATH. BTC is a bit overextended up here, but that doesn't mean it has to fall immediately, if at all. I think, more than anything, Bitcoin will trade sideways in a new higher range, possibly between $16,000 - $19,000 as it digests the gains from this Q4 2020 rally. Fundamentally, there is nothing short of a daily barrage of bullish developments and headlines which we have covered extensively. This is wonderful and what we've all been hoping for, at least those of us who have been in this space for a few years now. However, as you can see in the second chart below,
Bitcoin's 'Greed' level is at an extreme, indicating extreme bullish sentiment and usually foreshadowing a correction in the near-term. Among several other technical indicators, I think this spells out how unlikely a current non-stop rally is, despite how much the price appreciation makes sense and coincides with fundamentals supporting bullishness. Based on headlines, one would almost think the world is pretty normal right now, as stock markets are at ATHs, there are reports of 'falling jobs claims,' 'better than expected GDP,' 'restrictions lifting,' etc. This is a lens of sentiment which almost makes one forget we are 9 months into a global pandemic that has killed 1.5 million people, has caused trillions of dollars of damage to businesses and governments alike, and will likely make tens of thousands of people homeless in 2021 as foreclosure forbearances are lifted and out of work homeowners are evicted from their homes. I think this is a can that is not very far down the road and will have a detrimental effect on traditional markets as well as crypto, which is not immune to legacy market action.
Going forward, I am a buyer on dips and continue to accumulate along with smart money which has been snatching up Bitcoin as it becomes less and less finite and appreciates in value against the rapidly depreciating fiat currencies. I think pullbacks to the $17,000 or even $16,000 levels offer value and, though shallow dips, are discounts from buying at current prices just under the ATH.
Support: $17,000 or even $16,000 are my target for a local bottom on a near-term pullback, as it provided support late last week and into the weekend as Bitcoin sold off a bit. It's hard to believe but I think $16,000 is excellent value as there is a confluence of supportive variables there, being the most recent support, the 38.2% fib, and the rising 50 Day EMA which is just below and rising at ~$15,350. Below that, the 50% fib at $14,852 and the 61.8% fib at $13,670 should be very supportive.
Resistance: No changes; $20,000 remains firm resistance, which makes sense as it's the previous ATH. When BTC breaks above $20,000, which, may actually happen in shorter time than we had anticipated, I suspect a non-insignificant amount of stop-limit buy orders that are set just above $20,000 will be triggered, causing a rocket in price up to $25,000 or even $30,000 in short order.
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