It’s been a fantastic start to the year with Bitcoin up an impressive 37% at the time of writing. An added cause of bullishness was achieved with BTC closing out January above key monthly resistance at $9150. So what's next for Bitcoin?
The weekly seems to be shaping up quite nicely with clear and confluent levels. Bitcoin is currently trading above resistance at $9,550 and a weekly close above this level would maintain bullish momentum and we could see a push up to the $10,400 Range.
On the other hand, a close below support would result in switching my bias to bearish and I would expect a deep pullback as $8698 seems to be relatively weak support.
The daily chart paints an interesting picture and has a lot of confluence with the weekly levels. Price is holding above support and I expect a push up to test resistance at $10,380 but this is where I foresee problems for Bitcoin.
$10,380 has historically been strong resistance with the last two attempts resulting in a 29.74% and 37.93% pullback. It must also be noted the declining volume and bearish divergence which suggest a pullback is on the horizon.
What type of pullback to expect?
Previous attempts to break $10,380 have resulted in large-scale rejections. And while I do anticipate a pullback of sorts, I don’t believe it will be as forceful this time. Bitcoin has established strong support and the more a resistance is tested the weaker it becomes, and this will be the third test.
$9,550 is a price I really like the look of and provides good confluence with it being both a weekly and daily level. I fully expect a retest of this level before price gains enough momentum to smash through resistance at $10,380.
High time frames suggest Bitcoin is indeed bullish and primed for a great year, but pullbacks are inevitable and must not be confused with reversals. Pullbacks are not only healthy and necessary in order for price to continue to rise but they provide excellent trading opportunities to acquire more BTC.
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