Bitcoin (BTC) – Testing a crucial support zonePosted on Monday, January 17 2022 at 8:32 pm GMT+0000
Bitcoin (BTC) began last week with a sharp plunge to $39,600 but the dip was bought quickly and the crypto-king staged a recovery towards the $44,000 resistance level as upside momentum picked up after the United States December CPI number reduced risks of more dramatic action for the Federal Reserve. It also benefited from Fed Chair testimony who reran the same tape from the previous week’s Federal Reserve board members meeting which highlighted inflation worries with not more than three to four interest rate hike expectations for 2022.
However, Bitcoin kicked off the new week with a subdued tone and completely erased past week’s gains. The price is currently barely holding above last week’s low and the tentative ascending trendline drawn from October 2020 lows, which together with the ascending Ichimoku cloud should form a strong support barrier that is expected to deny any further dampening in the long-term technical outlook.
Technically, an upside reversal could be on the cards soon given the existence of the stochastic lines deep below the 20 oversold mark, and the recent upturn in the ROC oscillator.
If the bulls manage to set a foothold around the current support zone, they will attempt to crawl higher towards the section between the Ichimoku directional line around 50,000 and the 50% Fibonacci level at 51,000. Beyond this ceiling, the rally will likely see a sharp extension towards the 61.8% Fibonacci level at 58,000.
However, any drop below the last week’s low of 39,600 will degrade the technical outlook paving the way immediately towards the 30,000 – 28,500 zone. Any violation at that point will officially signal a bearish trend reversal in the long-term window.
In brief, the bulls are taking advantage of the critical support zone where the price is currently hovering and trying to push Bitcoin higher. That said, downside risks are still elevated at the time being and any drop below 39,600 will certainly motivate fresh selling.