The Bitcoin Price Reclaims Support Area After Brief Decrease
Following a brief decrease on November 16, the Bitcoin (BTC) price has now reclaimed a support area. Currently, the price is trading within a neutral pattern above a critical horizontal support area, prompting questions as to whether it will break out.
Bitcoin Breaks Out from Long-Term Resistance
Bitcoin’s weekly chart shows that BTC has seen a rapid increase over the past five weeks. The digital currency also reclaimed the $31,000 horizontal area at the beginning of October, a significant development given that the area had intermittently acted as both support and resistance since 2011. Moreover, BTC reached a new yearly high of $37,978 in November.
Market traders often use the Relative Strength Index (RSI) to identify overbought or oversold conditions in an asset. Readings above 50, coupled with an upward trend, suggest that bulls still have an advantage, which is currently the case with the RSI.
The Bitcoin Hashrate has also reached a new all-time high, indicating increased computational power used by miners. This usually leads to an upward adjustment in BTC mining difficulty following a hash rate increase. Despite previous increases being followed by downward movements, excitement about the Bitcoin ETF has taken over as the dominant narrative.
Argentina’s election of a pro-Bitcoin candidate as its new president, coupled with a recent report noting that Bitcoin adoption has reached a new yearly high, have contributed to positive market sentiment. This is despite increasing transaction fees.
BTC Price Prediction: Is $40,000 the Next Step?
Technical analysts employing the Elliott Wave (EW) theory have identified recurring, long-term price patterns and investor psychology to determine the direction of a trend. BTC’s most likely EW count suggests a five-wave increase beginning in September, with the current wave representing a corrective pattern. The upward movement could see the price increase by 35% and reach the next horizontal resistance at $50,000.
Despite this bullish BTC price prediction, a breakdown from the triangle pattern poses the risk of a 10% drop to the closest horizontal support area at $33,500.
Hot Take
In conclusion, the Bitcoin price appears to have reclaimed a support area after a brief decrease, signaling potential for a breakout. Technical analysts are predicting a bullish trend, with the price potentially reaching the next horizontal resistance at $50,000. However, a breakdown from the current pattern could result in a significant drop to the nearest support area at $33,500.
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