Bitcoin has gone back and forth during Wednesday trading, as we find ourselves testing the $7000 level. This is an area where one would expect a certain amount of psychological resistance, as it has been an area that is not only a large, round, psychologically significant figure, but it is also an area that has shown support in the past. In other words, we are approaching an area that will cause some issues.
The candlestick is showing a bit of confusion in this area as it is somewhat neutral, and that only exacerbates the idea of selling in this general vicinity. We have recently also seen the so-called “death cross”, when the 50 day EMA crosses below the 200 day EMA, but quite frankly even though that’s a very bearish turn of events, the reality is that it’s quite late as far as a signal is concerned. However, there are some longer-term traders it will be looking at this as yet another reason to short.
If the market were to break above the $7000 level, then it’s very likely that the 50 day EMA above will very possibly be resistance as well, and most certainly the $8000 level will be. Ultimately, I think that Bitcoin is going to continue to struggle, because in a world where the U.S. Congress and the Federal Reserve are pretty money out of thin air and doing massive amounts of stimulus, Bitcoin not been able to rise significantly tells you just how negative this trend is. Ultimately, if the market does rally from here, I suspect it’s not until we clear the 200 day EMA on a daily close that the longer-term trend will be positive. Until then, rallies are to be sold and even though we’ve had a nice little run over the last five or six sessions, when you look at the last month or so, you can see that it is yet just a bounce that seems to be running out of momentum. Even if the market were to turn around and rally significantly, the reality is that between now and then it’s very likely that the market will fall in order to find a retest of the lows as it is quite common in these significant bearish markets. Finding some type of solid base will be the best thing that Bitcoin can do, as the market matures, it starts behaving much more like a mature market.