Outlook: Bitcoin rallied during the week ending December 13th, initially falling to just below the $18,000 level before finding support over the weekend, rising back above the $19,000 level during low-volume weekend hours to finish the week on a positive note. This is possibly not as quite a bullish candle as it seems, as weekend trading is typically very light and throughout the week last week Bitcoin saw consecutive red days all week amid normal market volume. This leads me to believe that the downside is not over yet, although we'll have to monitor this closely as the market is not giving us a clear indication one way or another.
(December 13, 2020 7:30PM EST)
If Bitcoin were to break down from here amid low-volume weekend trading 'bull trap' price action, then a pullback to the 50 Day EMA around $16,000 is my first target. We've only gone down there once since putting in a new marginal ATH in late Nov, quickly dipping to just above $16,000 but then going on to print a marginal new ATH. I think a topping pattern is starting to form now on the weekly chart as it clearly has on the daily chart and has begun to play out. Now, I think we could see some weakness on the weekly chart.
However, if this bullishness is for real and last week's weakness to only the high $17,000s was indeed a retracement, then perhaps Bitcoin breaks up the $20,000 resistance level again and if BTC summons the strength to break above that historic level, go on to $25,000 or even $30,000.
It's starting to look like Bitcoin is carving out a new range up in this new altitude between $16,000 and $20,000, so I expect some more sideways trading and bouncing around in this range for some time before we see a sustained move above $20,000 in all likelihood. This gives us some time to accumulate with lower buy orders set near the bottom of the range, as well as patiently waiting for dips lower if they arise. Looking at the chart below, if Bitcoin breaks below the $16,000 level, I'll look for support around the 50% fib retracement around $15K, followed by the 61.8% fib at $13,813. These levels would equate to roughly a 30% pullback over the medium term and would probably satisfy a Wave 4 corrective pattern in order to resume the 5th wave higher. I'm a buyer on dips at the bottom of the aforementioned range and will be waiting (hoping) for a pullback lower to the $14K level to load up even more, though I think that might be asking a little too much at this point -- but who knows?
Support: I'm looking for a short-term pullback, most likely retesting the $16,000 level as support. Below that, $15K and $13k - 14K should provide strong support levels for a powerful bounce higher to resume the uptrend. Bitcoin's in a defined uptrend; I'm not challenging that, nor selling Bitcoin; I'm looking to add value on pullbacks.
Resistance: $20,000 is long-term resistance and has been for nearly three years now. Bitcoin’s not far off, but I think in the short-term, the path of least resistance is lower. Ultimately, I suspect 20K will be breached by Q1 2020, then we’ll be talking $25,000 and $30,000.
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