Bitcoin (BTC) Analysis: Will the exchange rate stay below $40,000 for now?

After weeks of rising, bitcoin is finally taking a break. What can we expect to see in the time ahead?

Bitcoin weekly chart
On the weekly chart (Figure 1), bitcoin has touched the $42,000 mark and this week has been mainly dominated by decline and consolidation. The week hasn’t been closed yet, but at the moment it shows a „hanging man“ candlestick.

This is a bearish candlestick and more often than not there will be a drop in the candlestick(s) after this. A side note here is that these work better if they are really made on the top.

The recent rise is, based on the price but also on chain blockchain data, comparable with the left rectangle. A parabolic move, then several weeks of consolidation and Bitcoin Circuit a touch of the 21EMA. It is good to keep this scenario in mind. The RSI is also significantly overbought and supports the bearish scenario.

Targets are then $29,880 – $30,000, $25,962 – $26,900 and $23,500 – $24,000 if things get tough. I do not expect the price to drop below 21EMA and thus stay above $20,000. In this video I explain further why I expect that the price will probably never again drop below $20,000.

After the dip, I see the price continuing towards $48,880 and $57,406.

In a more bullish scenario, the pattern should break out on the daily upside and make the $42,000 support.

Figure 1: A hanging man candlestick forms on the weekly.
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Bitcoin price daily chart
On the daily chart (Figure 2) the price is in a larger equilibrium pattern. A breakout from this will determine the further course of the price in the coming weeks.

Bullish scenario

A number of bullish points can be seen. On the daily, the price has the 12EMA again as support and is also above the golden pocket and the upper green rectangle as support. If it follows the white line, it may break out to the upside. If we can then get above $40,112 with volume and make the support, the way is up again.

Bearish scenario

In the bearish scenario, the price breaks out downwards following the red line. If it then loses support from the green rectangle, the next targets are the green rectangles between $29,559 – $30,347 and $27,052 – $28,209. Loss of support results in the lower targets mentioned on the weekly chart.

Figure 2: The price is in a larger equilibrium pattern.
Bitcoin price 4-hour chart
On the 4-hour chart (Figure 3) it can be seen that the price is quite volatile and has no clear direction within the triangle. The price is currently trapped between the 50MA and 100MA.

A breakout of the price beyond these 2 lines will give more direction to the price, but it is hard to say what the price will do in the sideways movement. The break of $40,178 makes a bullish daily scenario more likely. Losing the $34,380 makes the bearish scenario more likely.

Figure 3: The price is in a sideways consolidation within the triangle.
What will bitcoin do?
Bitcoin has made a provisional top. The weekly still paints a picture of a deeper correction to come. This will depend on the daily equilibrium pattern. If it breaks out upwards, we will continue upwards for a while.

If it breaks out downwards, the red daily scenario is the path of least resistance. Targets then are the weekly support points.

Which way we will go is difficult to say. On the one hand, a good correction is needed. On the other hand, demand for bitcoin is sky high. So the question is how deep will the big institutions, with the huge demand, let bitcoin fall?

This is all in the near future by the way. In the longer term for the next 6 – 12 months am hugely bullish on bitcoin.

John van Meer

Bitcoin Consultant, John van Meer, has been educating the general public about cryptocurrency for years through webinars and seminars and online courses.

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