Bitcoin remains red hot. While the cryptocurrency is flat on Friday, bulls must be happy with the way it’s holding up.
For a volatile asset like bitcoin, the word “flat” is not often used to describe its price action. But that’s what we have on Friday after a 9.9% rally on Wednesday and another 6.8% gain on Thursday. The move sent bitcoin to its highest level ever.
Some investors expected bitcoin prices to relax slightly. That’s after it rallied as much as 11.3% on Thursday before its earnings were cut down.
It looked like a very tired rally as bitcoin rallied for six straight sessions into December 17. The start of that rally can be traced back to a December 11 low near $ 17,570.
Bitcoin immediately increased more than $ 6,200 to Thursday’s peak, a 35.3% increase.
Earlier this year, legendary trader Paul Tudor Jones called bitcoin the “fastest horse” as it sought investments to benefit from money printing, low rates and other liquidity-boosting efforts made by the Federal Reserve and other central banks.
I guess he was right.
Bitcoin trading
Weekly chart of bitcoin prices.
Chart courtesy of TrendSpider.com
I don’t think Thursday’s rally identified a ubiquitous point in bitcoin – at least, not in the long run.
On the weekly chart above, we have a simple plan that helps explain the different rallies and breaks.
Bitcoin has been in strong progress since starting in March. The 200-week moving average eventually flew as support, but it held up well under compulsion.
From there, we had a breakout over $ 10,000 and then bitcoin held that level as support. For a bullish trader, that is an excellent development in price action.
Bitcoin then flew higher, up towards the previous high ever just below $ 20,000. Naturally, bitcoin stopped near this level as it neared previous highs. Further, the 161.8% extension from the low of March to the previous high of 2019 played nearly $ 19,800.
Pushing through this area with great force, bitcoin tagged the range extension two times at $ 23,528.
So what now?
I don’t know if we’ll get it but a withdrawal towards $ 20,000 would be an excellent development. It doesn’t have to hit $ 20,000, but a notable dip alone could be an opportunity.
Not only would it give buyers another opportunity to “load up the truck,” but it could show that previous resistance is now support as we saw with the $ 10,000 level. Also, it would allow bitcoin to plummet after a major run in a short amount of time.
If the $ 20,000 area fails as support, it will give the 10-week moving average in play.
If bitcoin can pull the current high at $ 23,630, then the 261.8% extension may be the next target up near $ 29,562.