Has the time for the technical rebound come? – More fear than harm after the hot alert last weekend, Bitcoin (BTC) seems to have regained his senses. Indeed, it manages to keep its both critical and symbolic support of $20,000 afloat. But from there hope for much better, a real boost would be needed to temporarily ward off the specter of a depressing bear run.
Moreover, the good week for the US equity indices, both the S&P 500 and the Nasdaq Composite, would suggest a large-scale technical rebound across all risky asset classes. And more particularly for cryptocurrencies which have taken to their heels for several weeks. In a market context that is less gloomy than usual, the hypothesis of seeing the king of cryptos set out again to attack major resistance could make sense.
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Bitcoin in Weekly Units – $20,000 Support as Falling Point?
In the current state, Bitcoin would end the week in the green conditional on a close above $20,553. However, this would not offset the previous two bearish candles on the weekly chart. Hence a certain caution despite the good performance of Wall Street this week.
Apart from the rescue of the $20,000 support, it is clear that the favorable technical signals can be counted on the fingers of one hand. Fortunately, there are some, although it remains precarious. First, in the same BTC price dynamics, the Chikou Span drowned under the Kumo (cloud), managed to rely on $20,000 to bounce back. Second, the large gap between price and the Tenkan could mean that the downward move since the last failure below the $46,000 resistance is starting to get excessive. And lately, BTC prices have significantly exceeded the final head-to-shoulder (ETE) targetwhich according to my calculations, is around $24,000-25,000.
In case the following weeks become carriers, the recovery of the king of cryptos towards the resistance of $30,000 would best reflect the integration of major risks in the financial markets. And compared to its bear run since its last ATH in November 2021, that would be the best case scenario we could aspire to.
Bitcoin in daily units – $26,000 before $30,000?
Even if the situation is struggling to settle down into daily units, Bitcoin prices are showing a willingness to rebound from the $20,000 support. Despite a still unfavorable position with respect to certain curves of the ichimoku, they would be about to break up the Tenkan. And if it were to be confirmed later, the Kijun near the resistance at $26,000 would be an intermediate target for a possible technical rebound towards $30,000.
Better still, in the event of a new successful show jump, the king of cryptos would return to contact with the Kumo. And at the same time, it would approach the descending line of the bear run. But even so, this would not allow the Chikou Span to exit the cloud from above.
Especially since this possible improvement in BTC prices in daily units could have a hard time translating into good news in the medium-long term. Because in this regard, Future Kumo’s trajectory on the weekly chart would risk extinguishing buying convictionsat least until the end of 2022.
In summary, seeing Bitcoin not drop below $20,000 is certainly a relief for many cryptocurrency investors. However, the assault towards $30,000 does not call into question its bear run since its last ATH in November 2021. Indeed, sellers do not worry as long as favorable trend reversal points are not threatened.
As such, the long-awaited technical rebound could actually turn out to be just a process to trigger the capitulation phase when the time comes. In which case, BTC prices would risk heading towards levels that no one would have imagined revisiting anytime soon.
Not only do we no longer have to rule out this worst-case scenario out of respect for risk management. But the fact that the panic phase on US equity indices has not yet taken place, still raising a lot of concerns about cryptocurrencies, as the two risky asset classes are correlated. Hence the fear of a Bitcoin that would inevitably slide towards the $12,000 support, one of the key levels of the last bull run.
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