The cryptocurrency market continues to gain investor attention, especially as bitcoin prices have fluctuated in a wild fashion over the past few days and weeks.
Currently, bitcoin prices are up 5.5% on Friday to about $ 32,500.
However, it traded as low as $ 28,800 earlier in the session, which followed Thursday’s beat when bitcoin fell more than 13%.
At Friday’s low, bitcoin was down more than 20% finally on January 18, four days ago alone. Of its highlights, it is still down more than 22%.
The sharp rise and subsequent volatility have shaken many investors, especially newer investors who are not familiar with such volatility.
Now investors want to know what’s next – a bigger disadvantage or push to the climax. Let’s look at the charts.
Remember, the thing we love about bitcoin is that it tends to trade very technically. That is evident in the way bitcoin has traded up to key extensions and down to key moving averages and has received strong responses as a result.
Near the beginning of 2021, I took a look at bitcoin. The argument was that if bitcoin pulls the high – then at $ 34,800 – then a move to the 361.8% extension at $ 40,138 was imminent.
A few days later on January 8, bitcoin peaked at $ 42,00 and has been in a correction phase ever since. So what are we looking for now?
Bitcoin was a wedge formation, with a series of higher lows and lower lows. Prior to Thursday, it was unclear whether he was consolidating for a larger move higher or building for deeper correction.
So far, this is the last, as wedge support has broken. However, the recent low earlier this month near $ 30,635 stepped in as support. With the sharp recovery, traders now have a low to measure against.
With that said, it’s not a simple setup. On the upside, let’s see how bitcoin handles the 10-day and 21-day moving averages. Above both measures put $ 39,000 back in play.
Above $ 40,000 and the all-time highest on the table is $ 42,000, followed by a potential move to $ 43,050 and $ 45,350.
On the downside, Friday’s low loss (at $ 28,800) sets the 10-week moving averages and 50 days in play. In the current circumstances, that seems like a very solid buying opportunity and one I prefer.
Under this area it could give the extension 161.8% of the recent lower low play, all the way down near $ 24,850.
Here’s the bottom line: Watch the 10-day and 21-day moving averages upside down. Reclaiming them is good, while being rejected by them is bearish. On the downside, watch the 10-week and 50-day moving averages.