The worst seemed inevitable when Bitcoin (BTC) fell below $40,000 over the past week. But ultimately more fear than harm for the king of cryptos who currently seems to be moving away from this fateful support. The neck-shoulder-head (ETE) line that sits around the critical $41,000 support, has not been broken at the time of writing. Crisp for several weeks, supporters of cryptocurrencies hope to see the end of the tunnel.
Can we see a stronger rebound in the days/weeks to come? Or is this just a respite before the horde of sellers put all their might into battle to validate the bearish chart pattern? Technical analyzes in weekly and daily units lead us to believe that BTC’s trend is at a crossroads. And maybe it’s time for buyers to wake up.
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Do not sell the bear pelt until you have killed it: the shoulder-head-shoulder remains on the table
The validation of the ETE (Shoulder-Head-Shoulder) did not take place before the start of this weekend. But don’t think we’re off the hook. Selling the bear skin prematurely would be a big mistake. It is best to observe the development of the Bitcoin price over the next few weeks in order to have clear ideas regarding its trend.
The different supports mentioned in my different market points have jumped one after the other until now. Fortunately in weekly units, some curves of the Ichimoku indicator save the furniture. Although Bitcoin prices have successively broken down the Tenkan and the Kijun, it manages to bounce off the upper limit of the Kumo, the Senkou Span A (SSA). The best is yet to come a Chikou Span that sits above the Kumo and the critical $41,000 support.
The bearish momentum of BTC since its last ATH should not mask the underlying trend which has remained bullish since March 2020. However, in the short term, the king of cryptos has to overcome many obstacles.
A rebound above $45,000-46,000 is no longer enough to break the bearish momentum for more than two months
Some mention a return of Bitcoin prices towards $45,000-46,000. In daily units, this price zone, which is practically at the same level as the Kijun, corresponds to a resistance. From there to it being decisive for a trend reversal, the path remains long and uncertain.
Unlike weekly technical analysis, the Ichimoku indicator is not a weight support in daily units. Even taming the $45,000-$46,000 resistance and downtrend line, the significant thickness of Kumo could make it difficult for BTC prices to break above the SSB and make the trend uncertain in the short term. Moreover, the Chikou Span would still be blocked under the Kumo for several days. If this precarious rebound were to see the light of day, it would have the merit of removing the hypothesis of the ETE which would send us towards the support of $30,000.
In summary, the uncertainty surrounding Bitcoin has logically rippled through the entire cryptocurrency market. Doubt seeps into the minds of investors. But as long as the critical support at $41,000 holds, the chances of a rebound to stop the bearish momentum remain intact.
However, we will remain worried at the idea of seeing the other risky asset classes correct sharply over the next few weeks. Why ? Because the movements of cryptocurrencies are often harbingers of what is to come to stocks, commodities and bonds with a lagging effect. And what has been happening since the first 15 days of 2022 on these risky asset classes does not breathe serenity.
Combining his information with the prospect of an aggressive tightening of monetary policy by the FED, the “more fear than harm around $41,000” could very well turn into a “red alert, towards $30,000”. .
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