Keep in mind that Bitcoin is also a risk asset, so we need to have a “risk-on” type of attitude.
The Bitcoin market broke down significantly on Wednesday to slice through the 200-day EMA. By doing so, the market is showing signs of exhaustion, as we had previously broken out quite drastically, only to pull back and show signs of negativity yet again. Because of this, the market now is looking at the 50-day EMA, which is curling higher and could be an area where people are interested in getting involved.
The size of the candlestick is rather important, and another thing that does have me a bit concerned is the fact that we have broken through the bottom of that impulsive breakout candlestick, so the question now is whether or not Bitcoin can find buyers? While I am not looking to short the market right now, I recognize that we could have further to go to the downside. I am waiting for some type of supportive or bullish candlestick on the daily chart to buy more because Bitcoin looks as if it is going to struggle in general. The marketplace is a very noisy place to be right now, and I believe that it is probably only a matter of time before we get an explosive move. The question now is whether or not this has been a “false breakout?”
The $50,000 level above could be the target if we break out to the upside, but at this point, I think it looks like the market is more likely than not to go sideways at best. If we were to break down below the 50-day EMA and close lower on a daily chart, then it is possible that we could go looking to reach the $40,000 level. The $40,000 level is an area that has been important in the past, so I would anticipate that there should be a certain amount of buying pressure there. We recently formed a complex “W pattern”, which is bullish. That being said, we have not had the follow-through as you would expect.
Pay close attention to the US dollar, because if it starts to strengthen quite drastically, that could weigh upon this market as well, as it of course is priced in those very same US dollars. Keep in mind that Bitcoin is also a risk asset, so we need to have a “risk-on” type of attitude.