Bitcoin came off quite a bit in Q4, and could continue to pressure its uptrend in the early part of Q1. This is starting to shape up as another long-term trend test, of which most often BTC has passed. Will this time be the same?
Giving the trend and support from 2020 the benefit of the doubt, a test of the 40k area could bring a bottom that helps send Bitcoin back to the upside. Ideally, we see some type of capitulation price action occur as the test unfolds, demonstrating a wash-out type low that can help clear the way for the upside.
However, should we see support get broken in convincing fashion the retracement would become rather deep for it to indicate a healthy corrective move. On a clear break of 40k the next area of support doesn’t arrive until under 29k.
From a tactical standpoint, it appears longs or would-be longs may want to lean on 40k should we see it come into play soon, but if it breaks then stepping aside for lower levels may prove the most prudent move.
Bitcoin (BTC/USD) Weekly Chart
BTC/USD Charts by TradingView
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