Bitcoin initially dropped a bit on Tuesday but found buyers to turn things around and show signs of life again. By doing so, you could make a little bit of an argument for a “double bottom” trying to form, but at this point I think the most important thing to pay close attention to is the $40,000 level. The $40,000 level has been important more than once, so it does make sense that we could see stabilization here yet again. In fact, so far that is what we are seeing, and that is exactly what you need to turn things around given enough time.
If we can break above the $44,000 level, then I think we have the opportunity to rally from here and go looking towards the 200 day EMA, currently sitting at the $46,600 level. The 50 day EMA is starting to curl lower, and perhaps getting ready to break down below the 200 day EMA in order to form the so-called “death cross.” At this point, I would also point out that the negative indicator is typically late, so I think it is probably something that you need to realize does not always work.
At this point in time, I believe there is a significant amount of support extending all the way down to the $38,000 level, so it is really not until we break down below there that the support level will have given way. Sure, a breakdown below the $40,000 level would catch a lot of headlines, but there is a lot of noise underneath there. If we break down below there, then it is likely that we could go looking towards the $30,000 level. At this point, I would anticipate seeing more buyers as well. It does look like Bitcoin is trying to turn things around and pick things up, so I do like the idea of buying Bitcoin, I just would not jump in with both feet right away. I think at this point if you buy the market, then you could add as the market moves in your favor and keep your position size reasonable at first, and then only build up as you are rewarded for being correct.