Market Update #2 (Bonus)
Are we breaking the downtrend?
Hello Everyone,
What is a Market Update Post?
This particular category of “Market Update“ will be a short market update in a less formal format compared to our weekly outlook article (A lot more rambling & immediate thoughts). I will make market update posts when I feel a more immediate post would be beneficial.
What is Happening?
Bitcoin has broken the downtrend on the daily time frame and now we wait to see if this change will extend to the weekly time frame. Over the past 2 weeks, Bitcoin has climbed to just under $42,000 (an increase of 27%) which is a strong signal that we are seeing a momentum shift.
What might happen next?
We are now just below the 8 week Simple Moving Average which has functioned as resistance for this downtrend since we broke below it in November. From here I think there are a couple of likely outcomes:
I think its most likely that the extremely small amount of supply available and the buying pressure causes us to trend up with minimal resistance for the next couple of weeks to months (similar to the first half of this bull run)
Another possibility that I think may happen is that we push up above (or close to one as we are currently) one of the main moving averages (8, 20, or 50 week SMA) before briefly pulling back into a bear trap and then continuing off into an uptrend
Or what I consider least likely, we could break down and continue the downtrend making this a bull trap.
There are of course many other possible outcomes but these are the cases I am looking out for with the first two being what I consider as most likely and the third being the least likely of all the possible outcomes I am considering.
What do we want to see happen
Ideally, we want to see a break above the 8 week SMA with a drop back to it in order to establish support before continuing upwards. The more areas we test for support the more stable the uptrend is.
Less ideal but still good would be that this sharp break out continues and builds up speed. I think this is more likely as Bitcoins supply is so low. This would be less optimal as it means we will have less support in the case of bearish news coming out and pulling us down (making it more likely that something breaks the uptrend and pushes us back to a downtrend).
Overall I am extremely excited as there is a strong chance we have bottomed out and are starting/will start within the next couple of weeks an uptrend.
Thank you for reading the article, if you have any feedback feel free to leave and comment, and if you think anyone would benefit from the info in here please feel free to share it.
Disclaimer: The information in this Newsletter is not financial, legal, or tax advice. I only trade on Etoro; if you are reached out to by people requesting you join a group or provide money, it is not me. My only public social media accounts are this Substack page, my Youtube page, my Twitter page, and my Etoro page; any others you see online are not me.