Bitcoin rallied last week, initially starting off slow around the $32K area before slowly grinding up, eventually breaking higher over the weekend to end the weekly candle near the highs just under $40K. This is a bullish turn of events and of course, a very bullish candle as BTC looks to be ready to resume higher after having seemingly completed a typical ~30% correction.
(February 7, 2021 8:30PM EST)
Outlook: Bitcoin recovered strongly last week, starting off slow and grinding upwards to eventually break higher late in the week, recovering most of the past few weeks' losses and even reaching above the $40K level again before pulling back a bit to just below that level Sunday night. If Bitcoin breaks above the $40K level and sustains a level above $40K, then we may be ready to head to higher levels, then targeting $50K+. If Bitcoin gets rejected by $40K, then we could see a pullback to $35K to consolidate further and put in yet another high low.
From an Elliott Wave Theory perspective, it seems like Bitcoin has completed its initial impulsive Wave 1 up, more recently a Wave 2 correction down, and may now be building up momentum leading up to the commencement of its impulsive Wave 3. Impulsive Wave 3s are notorious for being the largest and most powerful impulsive waves in a 5-wave sequence, usually the wave in which shorts are squeezed out and forcibly converted to bulls while their friends brag about their gains.
In traditional markets, the US dollar has recently experienced a period of strength while precious metals like gold and silver have dropped preciptiously with gold falling below $1,800 again, only to then find support and bounce back above $1,800 late last week. If the US dollar starts to stall and exhibit signs of weakness while gold grinds higher, this would bode well for Bitcoin as BTC tends to trade opposite of the US dollar.
Support: Look for support around the $35K level, then $30K, which appears to have formed BTC's bottom in this most recent retracement and higher low.
Resistance: Immediate resistance at $40K, which was already tested this weekend. After $40K, look for a move to $50K, then $55K, $60K, etc. I imagine $50K - $55K would be strong resistance, although the bigger Bitcoin gets the more legitimacy it gains = more institutional investors can justify taking initial positions, which would only add to the disproportionate demand vs supply.
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