- Bitcoin rallied during most of the trading session on Friday but gave back gains as we continue to see a bit of hesitation.
- The market has struggled to break above the $22,500 level, and it now looks as if it is trying to carve out a bigger rectangle.
- Bitcoin looks as if it is trying to form some type of bottoming pattern, but it has a long way to go before it completely recaptures the momentum.
The question now is whether or not Bitcoin will suffer at the hands of the rest of crypto, which has had major issues. There has been a lot of fraud and Ponzi scheme situations exposed, so in a sense that will be negative for crypto overall, but the fact that Bitcoin has avoided all of this may end up making it even stronger over the longer term.
Furthermore, I would also look at the candlestick for the Friday session as showing that there just is not enough momentum to turn this market around quite yet. Having said that, if the market were to break above the shooting star for the Friday session, it could unleash a recovery play to the 50-day EMA which sits just below the $25,000 level. Breaking above there opens up the possibility of the $28,000 level, which extends all the way to the $32,500 level as a major consolidation area that should be rather difficult to get through.
If we break down from here, then we will reenter the consolidation area that we’d been in previously, which would be just a continuation of what we have been dealing with over the last several weeks. Nonetheless, we are still very much in a downtrend, so I think it’s probably only a matter of time before we do break down because typically consolidation will lead to continuation.
If we do break down, a move below the $17,500 level would be possible. In that scenario, we could be looking at the market dropping down to the $12,000 level. In fact, a lot of pundits expect Bitcoin to make it all the way down there, where will spend a large amount of time consolidating via a “crypto winter.” This is when the market goes sideways for a very long time and those who believe will accumulate.
