Technical analysis: Bitcoin continues to look strong

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bitcoin-analysis

There is no reason to be bearish when looking at the price action of bitcoin. The market indeed was very bullish a few weeks ago, like I wrote in my previous analysis, and continues to be bullish today.

In the daily chart, you can see ascending triangle formation below the $50k price level. $50k price level seems to be the resistance to pay attention to now; it is a round number.

Speculators who sell and buy bitcoin tend to think these kinds of big round numbers matter, so it becomes a self-fulfilling prophecy. Being a chart-based trader is a matter of finding S/R (support/resistance) levels that a big enough amount of money pays attention to. $100k is an even bigger round number.

This ascending triangle where price creeps up just below a big resistance often leads to a strong breakout. If the price reaches the $50k level and holds above it as it did after crossing the $20k price level, then we are probably going to start climbing towards the $100k level.

If we see strong FOMO buying after getting above the $50k and reach the $100k level relatively quickly, it is likely to be a stopping point. Such price action could cause a correction and calm down the market before reaching the $100k price level again and holding above it.

To turn things bearish, we need to see a dump and a retrace that does not get back above a short-term S/R level. This kind of short-term S/R level is now at $42k-44k. This could mean that the trend continuation from the $29k bottom was premature, and the market needs more time to gather energy to keep going up.

Longer-term for this bull market, the upside targets are very unclear. We have to look at the fundamentals to think about these targets. The fundamentals are that the covid crisis has started a trend in world economies where central banks have to keep creating more money to keep the economies running. Bitcoin has become an asset that provides security against the weakening dollar. There is no longer-term upside target for now, which is very bullish.

Like I have written before, bitcoin is likely to be bigger than gold in the future. During this bull market, we might see this shift happening.

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