Bitcoin finally woke up with a big, fat green candle. This shouldn't come as a surprise to readers of The Weekly Close:
“We stand firm in our conviction that this market has bottomed. A test of the first HSR (horizontal support resistance level) around $20K looks imminent, possibly this week.” — The Weekly Close #10: Bitcoin doesn't care; January 9, 2023
Traditional market analysts will, once again, have some head-scratching to do this Monday morning. It must be exhausting to keep getting surprised by bitcoin not dying. Anyway, let's dive into the weekly charts.
📈 The weekly bitcoin charts
Here's our trusted weekly chart, with the significant HSR (horizontal support/resistance) levels and the green trend line:
We've added in the 21 EMA (the 21-week exponential moving average) in yellow:
The 21 Weekly EMA works well as a border between up and down trends:
In the above chart, we can see that, in the past, the combination of testing the bullish trend line followed by a convincing break of the 21 EMA led to weeks of upside.
Our favorite momentum indicator, the Relative Strength Index (RSI), is also screaming bullish with a move back through the midpoint (horizontal white line) for the first time since May 2022, when we made a local high of around $47K.
🔥 To bring it all together:
The most likely path forward is up. But a retest of the 21 EMA, around $20K, is possible. Even a dip down towards the bullish trend line, currently around $17K, is not out of the question. However, making lower lows after a break of the 21 EMA is unlikely.
🔮 How high can we go?
The obvious next target is the 200-week SMA (simple moving average, the white line). It's an anomaly for bitcoin to spend any time below the 200-week SMA (and a fire sale for anyone looking to buy some).
The 200-week SMA currently sits just below $25K. So, that's the next target. How fast we'll get there is hard to say. It could take anything from hours to months. But once bitcoin closes a weekly candle convincingly above the 200 SMA, our target of $28K is well into the reach, and the road to much higher prices is wide open.
The price seldom moves in a straight line. There will be pullbacks and surprises along the way. However, the future is up 🚀🚀🚀
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📺 An inspirational clip before you go:
Michael Saylor explains bitcoin in 2 minutes:
Greetings from Phnom Penh, and talk again soon!
Not trading advice. You are solely responsible for your actions and decisions.