Bitcoin rallied on Monday to start off the week, breaking above the 50 Day EMA after initially falling, and eventually closing near the $11,000 level at the top of the recent channel. This is a bullish development in the short-term, and depending on follow through, could be the beginning of a micro 5 wave cycle.
(September 28, 2020 8:00 PM EST)
Support: $10,000 continues to be strong support, which is a significant psychological inflection point. The key here is whether or not Bitcoin will hold onto the 50 Day EMA as support, or continue to sell off after a day or so. Look for action there, and further support below at the 200 Day EMA.
Resistance: Another week another fight for the 50 Day EMA. I'm not convinced this Bitcoin run-up is sustainable just yet until Bitcoin shows repeated successful retests of the 50 Day EMA as support. If BTC breaks impulsively above that, look for a move to test $11,000 again. Bitcoin has been bouncing around in this $1,000 range between $10,000 and $11,000 for a couple months now, and there's a tightening wedge forming on the Daily chart, which usually leads to a breakout or breakdown.
Outlook: Today was a positive day for Bitcoin; a third consecutive green candle in a row and recapturing the 50 Day EMA are both bullish developments. I still think there is a lot of FUD in the markets and October looks to be a volatile month, so this week could be a big week in determining which direction in the near term markets (and Bitcoin) are likely to go. Based on the pattern above, I am leaning toward the tightening wedge leading to a short-term breakdown, probably to the $10,000 and possibly the 200 Day EMA, which would be a reasonable and healthy pullback. A lot of investors are in cash right now and the air is wrought with fear and tension, so I wouldn't be surprised to see continued selling for another week until the Fed juices the market with more capital injections, bolstering market prices and reinvigorating investors with liquidity and fed support. It's during this pullback, if it happens, that I will look to be a buyer and continue my BTC accumulation for a strong Q4 2020 and 2021+ for Bitcoin.
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