Outlook: Bitcoin rallied a bit on Monday, finding a bit of support to start off the week after a bearish close into the weekend last week. There was a bit of back and forth with Bitcoin rallying as high as $19,500 and falling as low as $18,500, essentially trading sideways to close the day slightly positive. Yet the important note here is that, while Bitcoin remains above the $19,000 level, for now, it appears to have struggled with quite a bit of resistance between $19,000 - $20,000. Looking at the chart below, this looks like a topping formation to me, with choppy days and no higher highs in about a week. In fact, if you look at the last few candles, you can see a slight drift lower - lower highs. This is something to be watched, as Bitcoin very well could be starting a pullback that could last early into the new year.
(December 7, 2020 7:30PM EST)
I think a pullback makes sense here for Bitcoin, despite another bullish headline from Michael Saylor on MicroStrategy doing another capital raise and throwing tens of millions more into Bitcoin. I think the buyers are a little exhausted and we are at a major resistance level. Bitcoin would do well to digest the gains, retracing at least a bit to the 23.6% fib where Bitcoin bounced off last week, finding support just above $16,000, of which the 50 Day EMA is not far below. I think this is a minimum target, though it may be the farthest fall we get. Ideally, a swift selloff to the $13K - $14K range would be ideal, finding support there at the 38.2% fib and a previous resistance area, but given the institutional flood of capital buying Bitcoin, I'm not sure a 30%+ fall is likely from these levels.
I'm a buyer on dips, of which there haven't been many. I think patience is the key here to get another entry around $16K - $17K, or ideally lower, but until then, DCA should be a good strategy for the medium-long term. I'm not a seller at all, even at $19K+.
Support: I'm looking for a short-term pullback, most likely retesting the $16,000 level as support. Below that, $15K and $13k - 14K should provide strong support levels for a powerful bounce higher to resume the uptrend. Bitcoin's in a defined uptrend; I'm not challenging that, nor selling Bitcoin; I'm looking to add value on pullbacks.
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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