Bitcoin pulled back a bit on Tuesday, initially reaching above $19,000 before falling below the level, closing the day on a negative note. Afterhours, it's not pictured below but Bitcoin has continued selling off, falling to roughly $18,300 at the time of this writing.
Our call for the likelihood of a pullback appears to be spot on, as Bitcoin appears to be finally giving way to lower prices in the short-term. As mentioned previously, my initial target is the ~$16,000 level, possibly $16,100 or so to be precise, as the 23.6% Fibonacci retracement level of the October-November rally sits at $16,155. Additionally, this is just above the 50 Day EMA and Bitcoin's Thanksgiving weekend selloff dropped to the same level where it found support and bounced up to marginal new highs from there. I think this is a safe target for buying the dip, as $16,000 is roughly a 20% discount from $20K. But that's not to say Bitcoin can't go lower than that.
(December 8, 2020 7:30PM EST)
Should Bitcoin drop below the $16,000 level, I think Bitcoin will likely find strong support at the next Fibonacci level - the 38.2% fib - around $14K. This is a historically significant level - the 2019 highs and a resistance level for a week or so during October. At this point, I think the downside is limited for Bitcoin, despite its reputation for volatility. Fundamentally, it's a strong and only strengthening asset with strong macro economic properties and institutional investors are bursting through the floodgates with what seems like daily newsflow of 8-9 figure investments in Bitcoin from hedge funds and high net worth investors.
I'm a buyer on dips. I think patience is the key here to get another entry around $16K, 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 continuation on this 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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