The Bitcoin market has rallied ever so slightly to reach towards the $50,000 level but is clearly running out of some of the momentum it has seen over the last couple of days. Because of this, we may get a short-term pullback, but it should be noted that the recent pullback towards the 50 day EMA was textbook technical analysis, as we held a very important moving average with a neutral candlestick. Because of this, I believe that the $44,000 region is going to continue to offer support as the 50 day EMA is not only there, but we have already seen a bit of reaction to it.
To the upside, I believe that the $50,000 level will continue to be somewhat important resistance, at least from a psychological standpoint. This is not to say that we cannot get above there, just that it may take a couple of attempts. After all, a lot of retail traders like the idea of big figures as they tend to attract a lot of headline noise. Breaking above that then opens up the possibility of a move towards the $52,000 level, which is where we had sold off from previously.
All of this being said, I have to stress that although we are in an uptrend, without a doubt the biggest amount of volume that was traded was on that nasty red candlestick that sent us towards the 50 day EMA. It is because of this that if we break down below the 50 day EMA, that we will get to the 200 day EMA, which is essentially $40,000 or so, rather quickly and we could see another brutal selloff. This would make a certain amount of sense based upon the most recent news flow about the lack of Bitcoin actually stored on exchanges, as it looks like liquidity could be an issue at times.
Nonetheless, this is not a market that I would be interested in shorting until we get below the 200 day EMA, so even if we do pull back am still looking at this through the prism of a “buy on the dips” type of scenario. The size of the candlestick for the trading session on Thursday certainly suggests that we may get that dip. Again, I remain bullish but also a little bit cautious.
