Bitcoin was flat on Tuesday, initially rallying before pulling back and giving back nearly all of the gains to close the daily candle virtually flat. This is a pretty neutral candle as you could make an argument for either bulls or bears but if you look at the current trend you'll see a tightening wedge that should break in one direction or the other soon.
(January 19, 2020 7:30PM EST)
Bitcoin finished the Tuesday trading session nearly flat as Bitcoin continues to chop sideways, seeing a major reduction in volatility to start the week. Bitcoin is forming a tightening wedge which appears to be getting close to a resolution point soon. Once we reach that terminus of the wedge, Bitcoin should violently break either up or down decisively.
My primary view has been that Bitcoin will double-top and drift lower as it looks to complete a correction from this massive run-up to new ATHs. So far this appears to be valid as Bitcoin appears to be putting in lower highs slightly more than higher lows, so we'll have to monitor this closely. If there's any indication as to the direction Bitcoin will probably break, I think the recent rally in the US dollar and bearishness in gold offers a bearish forbearance on Bitcoin which is negatively correlated to the US Dollar and often trades similar to gold. Based on that and continued short-term uncertainty, I think we could see lower prices in the short-term which will eventually conclude and allow Bitcoin to resume higher.
Going forward my mantra is to buy on dips, dollar-cost average on a regular basis, and even earn Bitcoin if you can. The path of least resistance is up; don't try to fight it unless you're a degenerate gambler willing to get burned.
Support: Look for support around $30K (38.2% fib) and then $25K (50% fib). Anything lower than that is a screaming buy, though I'm not even sure we'll see $25K again. For more precise price targets, set staggered buy orders at Fibonacci retracements levels and monitor price action to see what gets filled and if Bitcoin starts to form a convincing-looking reversal, adjust accordingly (up).
Resistance: $40K remains immediate near-term resistance. If Bitcoin breaks above $40K, look for $45K, and then $50K. After that, we'll probably move in $10K increments.
It's worth noting that somewhere around ~$52K Bitcoin's market cap will equal $1 trillion, so at that point, I think we could also see a selloff. However, any rally thereafter should be further supported as a $1T market cap would give the green light for many more conservative institutional investors to initiate Bitcoin positions as Bitcoin will finally be "big enough" for them to even add an allocation.
