Bitcoin has seen quite a bit of choppy behavior during the course of the week, and the Thursday session was more of the same. It looks as if the 50-Day EMA is in the neighborhood and causing support. If the market were to break down below the Monday candlestick, then it is very possible that Bitcoin will start to look at the 200-Day EMA, which is at the psychologically crucial $25,000 level.
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If the market would break down below the 200-Day EMA, it would send a lot of algorithmic traders to the short side, and Bitcoin would more likely than not start falling drastically from there. In the short term, it’s probably worth noting that we have just formed something along the lines of a very ugly head and shoulders pattern so although it’s not a perfect setup, it is an area where a lot of people will be paying close attention to how bitcoin behaves.
Furthermore, we are starting to see a little bit of strength in the US dollar, so that will be something worth paying attention to as well, as bitcoin is measured in those very same US dollars, making it cheaper to buy bitcoin when the greenback strengthens. Beyond that, we have sentiment indicators showing people being drastically bullish, which normally sets up something in the opposite direction before it’s all said and done.
On the other hand, if the market breaks above the 28,000 level, then it opens up the possibility of a move to the $29,700 level. After that, the market could go looking to the $30,000 level where we should see more of a fight and a barrier for bulls to overcome. Regardless, expect a lot of choppy behavior so maintaining a reasonable position size and tight stop losses might be necessary as we sort out the next move in Bitcoin, which will in turn have an outsized effect on the rest of the crypto markets.
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