Bitcoin pulled back a bit on Monday, starting off the month of February with a dip to about the $32,000 level before finding support and recovering a bit to the $33,500 level at the daily close. This is a pretty neutral candle as Bitcoin continues to experience turbulence despite an undeniable wave of bullish market sentiment and fundamental variables, though we'll have to see if Friday's long-wicked candle was a break of the short-term downtrend or a bull trap. However, if there's any consolation to today's red candle, it did not print a lower low, so more a sideways day than anything.
(February 1, 2021 7:30PM EST)
Outlook:
Bitcoin had a weak start to the week and month Monday, dipping slightly before recovering some of the loss to end the day slightly negative. It will be interesting to watch Bitcoin now because we ultimately still have two potential paths of the table: continuation of the downtrend taking us to another retest of $30K (or lower), or an impulsive bullish candle higher to officially print another higher high and signify a new short-term uptrend.
This week should continue to see extreme volatility as a lot of market levers are being pulled amidst a Main Street Gamestop vs Wall Street Short Fund war in which proxy wars sprout up behind and around them. Markets are intricately related to each other and other variables, like the US Dollar rally a bit on Monday, have correlated effects on other assets with negative covariances (Bitcoin). However, the US Dollar has been in a very strong downtrend over the past year, and still is, though it may be starting to form a bottoming pattern. The DXY is hovering around $90 which has been supportive lately. The DXY is currently around $91 which is the just below the 50 Day EMA, so if the DXY gets rejected by the 50 Day EMA then we should expect to see sustained US Dollar weakness and strength for BTC.
One thing I noted on the chart above was the 50 Day EMA which has been steadily rising -- and providing support -- for Bitcoin dating back to mid-2020 following the COVID March Black Swan event. Since then, the 50 Day EMA has been an area where buyers stepped in to BTFD, and I think this time is no different. As Bitcoin continues to consolidate/grind higher, the 50 Day EMA will continue to rise (a lagging indicator), providing a feedback loop of higher support and thus higher prices in perpetuity. As the 50 Day EMA continues to print higher, we should see buyers raise their buy orders to higher prices, thus strengthening Bitcoin's price.
If we see an inflow of even a fraction of the bullish liquidity that has boosted Gamestop and other stocks' prices up hundreds of percent over the past few weeks, then Bitcoin could be lifted to the ATH -- and higher. We should look for a higher close above $35K and then back up toward $40K. Higher highs is now the name of the game. One thing's for certain; people are fed up with the legacy financial system; it's time to embrace a new one that's been building and growing over the last 10 years.
Support: Support at the $30K level which has been tested and seems to have successfully held to date after barely hanging on a few times. If Bitcoin falls below, look for support around $25K, and then $20K -- if we even get there (probably not).
Resistance: Look for resistance at $40K, which we'll probably need to retest a couple times before heading higher. After that, look for resistance around $50K, then every $10K until $100K. Make no mistake; we're going higher, it's just a matter of when.
If you enjoy these posts, please support the channel by "Tipping" this post below, or using either of these referral links below.