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Bitcoin technicals this week indicate a possible shift in its recent downtrend.
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The cryptocurrency finds support at around $39,500, raising hopes that the correction is over.
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A potential trend reversal also hinges on developments in ETFs, Grayscale’s GBTC and global risk appetite, setting the stage for a pivotal week next week.
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This week, the coin traded along a downward sloping support line, extending its gradual decline that began in early January.
This shift occurred as the cryptocurrency, which witnessed a decline of almost 5% on the first day of the week, broke the downtrend after losing crucial support around the 41,000 area.
Support held around 39,500 during a week marked by increasing losses, raising hope that the correction may have come to an end.
Studying the technical aspects, clear indicators point to this area as a strong support point.
Notably, the three-month moving average at $39,800 is considered a crucial dynamic support for Bitcoin, which has historically led to meaningful reactions.
Furthermore, Fibonacci levels derived from the October and December high remain relevant, with a support line first forming around the 0.236 Fibonacci during the correction, followed by a support line at the 0.382 Fibonacci at the breakout zone.
The support line formed by the Stochastic RSI convergence, which rebounded from oversold territory after the ETF approval on January 11, indicates a potential recovery.
Buying at this support level may indicate an impending upward movement. However, crucial resistance levels stand before Bitcoin’s trend reversal.
By observing the daily chart, we will trace the 8- and 21-day moving averages at $40,670 and $41,800 as dynamic resistance levels.
A break above these short-term averages, followed by a clear daily close above $42,500, would act as a catalyst for a recovery, signaling the technical end to selling pressure.
The sustainability of Bitcoin’s potential upward momentum depends on positive developments, with the exchange-traded fund playing a pivotal role.
Easing pressure on Grayscale’s GBTC fund redemptions has boosted market sentiment, but attention is on potential changes to Grayscale’s fee policy, as highlighted in a recent JPMorgan report.
The global increase in risk appetite holds great significance for Bitcoin and interconnected markets.
Next week’s focus will be on the US economy and the Federal Reserve’s interest rate decision.
Markets expect the Fed to maintain current interest rates, but evidence of potential interest rate cuts will be closely watched, impacting both traditional and Bitcoin markets.
If Bitcoin maintains its support at around $39,500 until the interest rate decision, it could create a favorable environment for recovery amid possible dovish comments.
In such a scenario, a decisive break above $42,500, reaching resistance at $44,300, could unleash momentum towards the $50,000 region.
On the downside, if Bitcoin fails to recover from the downtrend and falls below the three-month moving average, it will likely fall back to the $34,800-$37,000 range.
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Disclaimer: This article is written for informational purposes only; It does not constitute a solicitation, offer, investment advice or recommendation in any way, nor is it intended to stimulate the purchase of assets in any way. I would like to remind you that any type of asset is evaluated from multiple points of view and carries high risks, therefore any investment decision and the risks associated with it remain the responsibility of the investor.
2024-01-26 12:22:00
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