Bitcoin (BTC/USD) Price Testing Highly Important Support
BTC/USD Technical Outlook
- BTC/USD testing the important 40k-area
- A forceful rejection soon could set up the upside
- A break below support may hold significant ramifications
Since topping out in November at just over 69k, BTC/USD has been back-peddling. This has put some pressure on long-term bulls, but has done little to change the general ‘buy-the-dip’ mentality. Some day this mentality will be truly challenged as dip buyers become complacent, but are we anywhere near that point?
Maybe, maybe not. First, giving the benefit of the doubt to the upward trend and support around 40k, we are nearing a point that may soon offer up a good risk/ entry for those looking to join the trend or add onto existing positions that favor a resurgence in the bull market.
The 40k threshold isn’t just a psychological level, it’s a real thing dating to a peak in January of last year. There is a trend-line from 2020 that runs up in confluence. Furthermore, flushing the flash-crash low from Dec 4 is seen as a potentially bullish event; something we are seeing today.
A minor flush of this low at just under 42k into major long-term support could soon set BTC/USD up for a new run. It may take a little time to get going, but holding big support will be the first big test and accomplishment.
On the flip-side, if BTC/USD falls through support we could see a material shift in sentiment that leads to much lower prices. A failure to hold support in an upward trend would be an indication that dip-buyers may at the very least suffer significantly more pain before being rewarded, or worse the overall trend is changing towards an extended bear market.
But before getting too far into the bear market scenario I will first look for support to hold and take it from there.
BTC/USD daily chart
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.