Bitcoin has done very little during the trading session on Wednesday, after shooting straight up in the air over the last couple of trading sessions. We are currently trading around the $44,000 level, and I think at this point in time we are probably going to wait to see what happens with the bond market. If interest rates continue to drop, that should help out Bitcoin going forward, perhaps driving it to the $47,500 level above.
Underneath, the $40,000 level should offer a significant amount of support, especially considering that it is a large, round, psychologically significant figure, and the 20-Day EMA indicator is racing toward that level. The 20-Day EMA indicator has been rather reliable support over the last several weeks, and therefore I think it is something that will catch the attention of technical traders. Speaking of technical analysis, we also have to pay close attention to the fact that the RSI, or Relative Strength Indicator, is well into the overbought condition, so I think at this point in time we probably need to find some type of value.
If we do continue to go higher, reaching toward the $45,000 level, then I think a lot of psychology comes into play. However, I do think that the market eventually goes to the $47,500 level based on the longer-term charts, and the fact that it had previously been a major point of contention in this market.
On the other side of the equation, you also have to pay against the US dollar, which is more or less going to be driven by the very same bond markets I mentioned previously. With that being said, the fact that the jobs number comes out on Friday, I suspect that we have a lot of noise and short-term choppiness in the US dollar, which might give us an opportunity to buy Bitcoin at a lower price, which is essentially what I would hope to see due to the fact that I don’t like chasing trades, which has been extraordinarily dangerous in the crypto markets in the past, and I just don’t see how that changes anytime soon. True, there’s a lot of hope that Bitcoin is going to get elevated due to ETF acceptance in the United States, but that remains to be seen as well.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.