Bitcoin prices have been on fire this year, as have most cryptocurrencies. How could they not, given what we’re seeing in the NFT market, the rally in growth stocks (before the dip) and the surge in real estate prices?
No wonder the Fed’s worried about inflation — but that’s neither here nor there. We’re here to discuss Bitcoin and where it can go, not economics.
This crypto gave us exactlythe bounce we were looking for. On Wednesday, my alert for Bitcoin testing the 50-day moving average fired off shortly before the regular open of the stock market, so at first I was confused on what could have triggered already.
Let’s look at the chart.
How to Trade Bitcoin
On the daily chart above, notice how shares were trading down into the 50-day moving average. But it wasn’t just the 50-day. Nearby was also the key $50,000 mark (and it was also the prior 161.8% extension from the January correction).
Had Bitcoin not bounced, we would have likely seen a decline to the 10-week moving average, down in the $48,000 range.
Following the bounce, we’ve seen a quick rebound up into the upper $55,000 area. However, Bitcoin bulls aren’t out of the woods yet necessarily.
It’s struggling to push through the 21-day moving average, a measure that failed as support earlier this month and acted as resistance early last week. Now we’re looking at shares coming off an inside day on Sunday (highlighted with the purple arrow on the chart).
I would love to see an inside-and-up rotation over the two-day high and a push over the 21-day moving average. So far, that’s playing out nicely, putting the $58,000 to $60,000 area in play, followed by a potential push to the 52-week high near $62,200.
Above that opens the doors to the 161.8% extension up near $67,700.
On the flip side, we also have the potential for inside-and-down rotation. So keep an eye on the prior day’s low at $54,677. Below that puts the 50-day moving average back in play and potentially last week’s low.