Bitcoin Price Analysis: A look at the things to come
Disclaimer: This is NOT financial/investment advice.
- Bitcoin price is setting the stage for a 27% upswing.
- If this rally does occur over the course of a week or two, BTC will be at $42,267, an extremely significant level.
- Depending on what happens here, Bitcoin could either flip bullish and continue its bull rally like nothing ever happened or reject it and print a massive bearish pattern that predicts another 50% sell-off.
Bitcoin price is choppy, yes, the markets have been like this for a long time. This isn’t bad per se, trading ranging markets is the easiest, but this is a topic for another day.
Let’s get down to business, Bitcoin price — Where is it heading? What’s will it do when it gets there? Are we bullish? Are we bearish? so on and so forth.
Questions, questions and more questions…
Let’s address the elephant in the room — Bitcoin price is currently leaning bearish.
Why?
BTC sliced through the 200-day MA on May 19 and has been trading below it for quite some time now. So, yes, this is a major shift in trend from being overly bullish to bearish.
At no other point in its (relatively) small life span has Bitcoin price ever dipped below the 200-day MA in a bull run and stayed below it.
But then again, there’s a first time for everything.
(More on this topic will be explored either in a tweet thread or a separate article at a later point in time)
Back to the topic at hand, so, Bitcoin price is bearish and is actively looking to change this as the recent run-up and the successive dip are setting the stage for a catapult that could take a jab at the 200-day MA at $42,267.
Here’s a breakdown of how this run-up might evolve:
Bitcoin price has currently formed a new range that extends from $30,993 to $38,435.
- Bitcoin price has retraced 9.53% since hitting $38,446 and is now at an interesting place, 50% Fib level at $34,735.
- A bounce from this level seems likely, but readers should be open to a further retracement into the buy zone ($32,565 to $33,837)
- A dip into the area will be a perfect catalyst to kick-start the upswing that might retest the 200-day MA at $42,267.
BTC/USD 4-hour chart
Supporting the thesis for this rally is the head and shoulders pattern that is being formed on a larger time frame.
Head and Shoulders
Although unlikely, the theoretical target for this setup is $13,870. There are plenty of support levels that could cut this downswing short. Moreover, the target is irrelevant in this formation.
The important takeaway is the peak of the left shoulder at roughly $42,000, which coincides with the 200-day MA.
Bulls’ previous efforts to surpass this barrier have failed; therefore, it is crucial to see how BTC will react this time around.
So, to answer questions:
“Where is it heading?”
Up.
From a short-term perspective, Bitcoin price is looking to tag $42,000 or $42,267.
“What will it do when it gets there?”
As described, $42,000 is a crucial level and will be extremely important in deciding the next course of action for Bitcoin price.
Let’s simplify with the facts or potential facts we have collected so far.
If BTC breaches $42,000 and stays above it and maybe even trends higher, the potential head and shoulder formation will be delayed. The primary reason for this delay would be that it would push Bitcoin price above the 200-day MA and the retail will, typically, turn mildly bullish at this point.
In the case that it doesn’t, investors can expect an eventual downswing to the neckline at $30,000, which completes the head and shoulder formation.
The bullish case for Bitcoin
So, to sum it up, we don’t know what BTC will do when it hits $42,267. It could go up, down or chop.
“The further you try to predict into the future, the more uncertain it is going to be.”
The quote is something I remember from reading experiments on weather prediction by Ed Lorenz in 1965 and how chaos came into focus due to his simulation experiments.
However, looking at the price action, the supply zone ($46,000 to $52,500) is going to be a major resistance for the bulls if BTC climbs above $42,267. But a close above $52,500 might just get the ball rolling to restart the bull run.
If this were to happen, Bitcoin price could hit $60,000 and then give a go at the all-time high at $64,899.
Conclusion
Bitcoin price action isn’t confusing.
It is clear, that BTC is leaning bearish, but will experience a minor impulsive price swing to $42,267 after a dip into the buy zone, ranging from $32,565 to $33,837.
What happens at $42,267, which is the peak of the right shoulder and the 200-day MA will be critical.
It will be a test of strength between the bulls and bears or the market sentiment of the investors and if they are scared and withholding or ready to jump on board.
If there is one thing that you, the reader, would take away from this post is:
a 27% upswing to $42,267 from $33,186.
Fin.
Disclaimer: This is NOT financial/investment advice.
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