- Bitcoin is experiencing high volatility after one of the most prominent businessmen in the US publicly approved it. After Tesla and SpaceX CEO Elon Musk claimed that he now supports Bitcoin, market participants seem to be in an unreasonable FOMO situation.
Bitcoin is experiencing high volatility after one of the most prominent businessmen in the US publicly approved it. After Tesla and SpaceX CEO Elon Musk claimed that he now supports Bitcoin, market participants seem to be in an unreasonable FOMO situation.
Bitcoin tops out after important approval
After changing his Twitter bio to include a word, Musk tweeted that it is “inevitable in retrospect”: Bitcoin.
Following Musk’s comments, the buying pressure behind BTC rapidly increased, resulting in an increase of 19%. Bitcoin reached $ 38,360 within two hours from the $ 32,300 level.
The bullish impulse was significant enough to push this cryptocurrency from the descending triangle pattern it has been in over the past three weeks.
Indeed, Bitcoin has been in this technical pattern since January 8th. While the BTC price made a series of lower rises, the $ 30,000 support level prevented it from falling further.
Now that Bitcoin has crossed the $ 34,000 resistance barrier, the chances of it going up 15% to $ 43,500 have greatly increased. This goal was determined by measuring the distance between the widest range of the triangle and adding it to the break point.
Bitcoin US dollar price chart
The indicator that follows this trend shows that the period of Bitcoin consolidation is over. As SAR points fell below the BTC price, the overall trend was bullish on the 4-hour chart.
The MACD indicator also crossed the golden cross between the four-hour exponential moving average of 12 candles and the 26-candle exponential moving average of 26, a positive signal.
Meanwhile, the SuperTrend indicator gave a buy signal as Bitcoin broke through the $ 34,000 resistance.
Bitcoin US dollar price chart
Pay attention to this warning signal
Regardless of the optimistic outlook, the Tom Demark (TD) Sequential indicator predicts that Bitcoin is trading in the overbought zone. This technical index presented a sell signal in the form of a green nine candlestick on BTC’s 4-hour chart.
The bearish pattern indicates that the flagship cryptocurrency will go through a 4-hour candlestick correction of one to four candles before the uptrend continues.
It is worth noting that the TD setup is significantly accurate in predicting local peaks of the Bitcoin trend. The last two sales signals that have developed in the past weeks have been confirmed, causing significant retractions.
Therefore, the optimistic outlook should be viewed with some correction in mind despite the FOMO levels in the cryptocurrency market.
As long as the $ 34,000 support level continues, the bullish thesis will hold. But if Bitcoin breaks this critical support hurdle, a stronger decline could occur and push its market value to $ 31,500 or even $ 26,000.