A flash crash of tens of billions of dollars in losses does not go away overnight. Kind of like a sick person who is slowly recovering from a broken knee. Moreover, even the reassuring news around the Omicron variant did not have a significant impact on cryptocurrencies. This is why the technical analysis of BTC encourages us to remain lucid on the hot situation of the moment and in the approach of the last FED meeting of the year on December 14-15, which could hold its share of surprises.
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Don’t sell the bear skin until we kill it
Unless the situation reverses over the weekend, Bitcoin risks closing a fourth consecutive week on the downside with the validation of the break of the uptrend line (light orange dot) as a climax. This would be a first since mid-November 2019. Consequently, the bull run put in place since last summer is momentarily neutralized.
In weekly units, the prices of the king of cryptos are in the support around 48,000-49,000 dollars and the Kijun, the average price of the average points over the last 26 sessions. However, sellers shouldn’t cry for joy too quickly, as the conditions required by Ichimoku to validate a trend reversal are far from being met.
Firstly, BTC prices are far from below Kumo (Ichimoku cloud). On the other hand, of Chikou Span which uses the same variations as those of the underlying with an age of 26 sessions, did not break the uptrend line and appears to land on support around $ 48,000-49,000 (green dot). And if the fall of the ultimate component of Ichimoku were to continue below this level, we are still far from calling into question the underlying trend that has taken shape since the end of March-beginning of April 2020.
Bitcoin: Aborted rebound attempt at $ 50,000 but some grounds for hope
In daily units, it is grimace soup. Both Bitcoin and Chikou Span prices are simultaneously below Kumo. The conditions required for a trend reversal by the Ichimoku are validated in the short term while it is far from being substantive in terms of weekly units.
The bullish trendline and the Tenkan, the average of the high and low point prices of the last 9 sessions, have become obstacles in the attempt to rebound the BTC (light orange dot). As we repeated in the introduction, a flash crash marks the minds of investors. They can’t pretend nothing has happened.
In this grayness, however, there are some reasons for hope a few days before the FED meeting on December 14-15. First, the Chikou Span bounced off the old downtrend line (green dot). Second, Bitcoin prices are in the 50-61.8% Fibonacci retracement of the last bull run, which can potentially be fulcrums for a future rebound. Finally, during the previous market point, we noted that thee Bitcoin has been able to stay above the 200-day moving average. On this last point, investors attach importance as a major signal to preserve the bullish momentum in the medium to long term.
In summary, the threat would become serious if support around $ 48,000-49,000 and the 200-day moving average were to be broken. The next Bitcoin adventure would target the 40,000 point area which had made it possible to restart the wave of increases towards the last ATHs. Conversely, we would return to a neutral trend.
Caution will therefore prevail before the last meeting of the year of the FED. Due to its sensitivity to risk aversion, BTC’s decline in recent weeks could coincide with less accommodative monetary policy from the US central bank. The probable acceleration of tapering (slowing down of assets), which has the consequence of restricting liquidity on the markets, would contribute to this.
We will also be attentive to comments about rate hikes. If in the future, they prove to be gradual (25 basis points or 0.25% per increase), this would mean that the Fed would not have the ambition to fight inflation under penalty of jeopardizing the economic recovery. Thus, it would be curious to see if Bitcoin behaves correctly in an inflationary period in the same way as tangible assets (commodities, real estate, etc.).
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