Bitcoin USD Chart Analysis – Temporary Deceleration of the Recent Downtrend
The reporting week was marked by an initial bottoming above the 40,000 support zone. After the first delicate stabilization tendencies to the continued correction phase of the previous week were visible over the weekend, a renewed downward movement followed on Monday. With the highest recorded volume of the reporting week, the market tested how the reactions below the important 40,000 area. With a drop of 5% and a price of 39,644 USD, the daily low was then already reached and this was followed by a countermovement to 41,876 USD and thus back to the level of the previous day. The sign that buyers are present below the 40,000 support zone continued throughout Tuesday’s trading session, where Bitcoin gained further ground with a daily close of 42,745 USD. On Wednesday, Monday’s trading action also reverberated and led to another gain at USD 43,942. However, in the approach to the first resistance zone in the 45,000 area, selling pressure set in again on Thursday, which resulted in a price decline to 42,582 USD by the end of the day. A renewed price decline was halted halfway through the day on Friday and ultimately led to a slightly higher daily closing price at USD 43,099. It seemed as if a new stalemate between buyers and sellers would emerge and so the weekend shaped up accordingly in narrow trading ranges around the 43,000 area.Retracement at trend-determining supports
Review Daily Interval
After the price drop in mid-March 2020, a veritable countermovement established itself. This led to the resistance zones above USD 10,000. After an initial rejection and a consolidation phase of almost two months, a breakthrough through the fundamental resistance zone followed on July 27, 2020, which persisted since August 2019 and accordingly caused Bitcoin to fail several times already.
The area around USD 10,000, which served as resistance, was interesting in several respects. On the one hand, the 0.618 Fibonacci point of the entire downward movement, which was initiated at the end of June 2019 just below USD 14,000, was located in this price area. On the other hand, the zone around USD 10,000 simultaneously acted as a witness of the still bearish trend from lower highs since December 2017 (see the macro view on a weekly basis). Bitcoin was able to establish itself above the newly created support in the USD 10,000 area since the end of July 2020 and provided initial confirmation of a trend reversal of the bear market that had persisted since 2018 with the break of the resistance zone around USD 12,200 towards the end of October 2020. In the following weeks, the positive trend accentuated and led Bitcoin through the 14,000 resistance in early November 2020 and close to the then all-time highs around 20,000 USD for the first time in early December, which remained untouched for 158 weeks since the bull market in 2017.
With the breakthrough of the old all-time high at USD 20,000, the trend reversal was definitely heralded. Accordingly, there was a strong accentuation of the uptrend, which brought the Bitcoin price to its new all-time high just below 65,000 USD in just over 4 months. However, the rapid upward movement was abruptly halted in mid-May 2020, taking Bitcoin back to the USD 30,000 areas. After a three-month consolidation phase, the upward movement was continued no less spectacularly after a “rounding bottom” in the 0.61 Fibonacci area, which finally ended with a new all-time high at USD 69,000 in October 2020 after a “retest” of the 40,000 zone. Since then, a strong correction phase has dominated once again, which is currently leading the Bitcoin price back to trend-determining price territories.Outlook daily interval
The failure to reach the 50,000 zone, which newly served as resistance, was followed by a harsh correction that brought the Bitcoin price back to the important 40,000 support area in 11 days. With the smaller “fakeout” at the beginning of the reporting week, the market signalled a temporary end to the downward pressure. The subsequent stabilization is perceivable constructive for the time being, but the price action is not yet sufficient for evidence of a bottom formation. Only a penetration through the 46,000 resistance would signal a first return of the bulls.
The failure at the seminal 50,000 resistance led Bitcoin to the trend-setting 40,000 support zone in the last three weeks. The bullish structure, strengthened by the 189-day excursion to the break of the old all-time high in the USD 65,000 area, is battered, but the ingredients are still right for the time being for a continued price discovery above the new all-time high in the medium term. Only a sustained undershooting of the 40,000 zone gradually threaten this scenario. The next hurdles in an incipient “relief rally” are likely to be the price areas of USD 46,000 and then the 50,000 resistance. If the latter is overcome, the chances remain good for a continued upward movement.New price discovery phase shows weakness
Weekly Interval Review
Bitcoin was able to set a higher high above USD 10,000 for the first time in the weekly interval in 2020, which broke the prevailing bearish trend since December 2017. This broke the series of lower highs that lasted for 135 weeks (1).
Since this first overcoming of the bearish trend, the signs for a valid trend reversal became stronger. With the push through important resistance zones and a continuous development above the 21-week average (2), the probabilities for a renewed reaching of the all-time high created in 2017/18 increased visibly. This scenario was completed in mid-December 2020. This was followed by a strongly accentuated price discovery above this historical zone, which produced a new all-time high of USD 65,000 in mid-April. A consolidation initiated since then ended in a veritable price slide, which brought Bitcoin back to the 30,000 USD mark in just two weeks and even below the 21-week average (2) that has defined reliable bull or bear market phases in the past.
However, a subsequent breakout from the 10-week USD 30,000 – 40,000 consolidation area and a subsequent successful “retest” of the upper range of this channel most recently took Bitcoin above the all-time high created in April in an impressive counter-move. After the creation of the new all-time high in the 69,000 USD area in November 2021, a vehement correction phase set in again, analogous to the pattern observed in May. This initially led to the break of the 50,000 support zone, which then promptly caused a bounce in this area, which now acts as resistance. Accordingly, the last few weeks were again characterized by the correction phase that has dominated for two months now and finally brought Bitcoin back to the 40,000 price zone.Outlook weekly interval
The massive bull phase, which has lasted since July 2021 and originated from the healthy 0.618 Fibonacci area calculated since the start of the bull market and the all-time high of April, has been under scrutiny since the reporting week. Price movements above the 45,000 mark previously indicated a rapid continued price discovery in higher spheres. However, exactly this zone was undershot again during the reporting week. The bullish structure is thus not yet broken, but the market gives a slower pace than it would have been interpreted with price action above this zone.
The series of higher weekly lows or highs since October 2020 is intact, but with a sustained undershooting of the 40,000 zone would show significant cracks in the foundation. A renewed bounce off the USD 45,000 – 47,000 resistances additionally harbors the risk of a negatively acting “head and shoulders” formation. The weekly RSI index (3), which showed a negative divergence to the price trend despite an all-time high, had indicated that the momentum is on weak legs. A consolidation in this area is initially no leg break, as long as the trend of higher lows since July 2020 is not broken.
For the time being, the USD 40,000 zone should serve as support and the first resistances in the USD 45,000 – 46,000 area will provide information about the ongoing strength of the bears. Only a sustainable establishment above the 52,000 resistance zone makes a renewed price discovery scenario with new all-time highs appear realistic.
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