Bitcoin markets pulled back a bit on Tuesday as the $50,000 level has caused some resistance. The $50,000 level is a large, round, psychologically significant figure which will attract quite a bit of attention due to headlines more than anything else. Furthermore, the $30,000 level has previously been support, and it should now be a bit of resistance. After all, there is the concept of “market memory” that comes back into play, so it is likely that we will hear plenty of noise here.
If we pull back from here, then it is likely that we could go looking towards the $45,000 level, which has recently shown a significant amount of support. The market has been very bullish for quite some time, and as we have recently formed a bit of a bullish flag, the idea is that we could go looking towards the highs again, at roughly $60,000. Furthermore, this is also the top of a consolidation area that had previously been important, so all measures for a move towards that general vicinity.
To the downside, the 50-day EMA is breaking above the $40,000 level, which was the previous consolidation area that kicked off this most recent move. Because of this, the 50-day EMA and the $40,000 level should offer a bit of a “floor in the market”, especially as we are starting to see more momentum come into the market due to the “risk on” attitude of people around the world. Bitcoin tends to move based upon momentum and “FOMO”, which of course is “fear of missing out.” With so many retail traders jumping on the bandwagon and alt coins rallying, I do believe that this market will continue to go much higher.
If we were to somehow break down below the $40,000 level, then we may go looking towards the 200-day EMA and then eventually the $30,000 level. That does not look very likely at the moment though, but one thing you can count on is that Bitcoin is going to be very volatile, as the market typically moves on the latest emotional reaction more than anything else. It used to be a hedge against the US dollar falling in value, but has been moving in the exact opposite direction of that sentiment lately.
