Technical analysis update: BTCUSD (6th January 2022)

Bitcoin reached our short-term price target of 42 500 USD yesterday. We continue to maintain a bearish stance on Bitcoin and we expect selling pressure to be persistent. Our view is supported by bearish technical and fundamental factors. We view hawkish minutes by the FED as very bearish for the whole cryptocurrency market. Faster pace of tightening and increase in interest rates in the U.S. poses substantial threat for further rise in price of cryptocurrencies. This combined with bearish indicators on daily, weekly and monthly time frames suggest that trend remains to the downside and because of that we would like to set a new short-term price target for BTCUSD to 40 000 USD. Additionally, we would like to set a medium-term price target for BTCUSD to 37 500 USD.

(If you want to understand how we got to this conclusion, read attached articles from 16th November 2021, 13th December 2021 and 5th January 2022)

Illustration 1.01

Picture above shows the daily chart of BTCUSD. It also shows a head and shoulders pattern which got confirmed as the price dropped to 42 413 USD. This is extremely bearish and we will observe price action very closely in the following days. We will watch whether BTCUSD manages to stay below the neckline or whether it retraces back above it. If Bitcoin manages to retrace back above the neckline, then we expect price to bounce towards 46 000 USD price tag before dropping lower.

Technical analysis - daily time frame
RSI, MACD and Stochastic are all bearish. DM + and DM- show bearish conditions. ADX continues to increase which suggests that the bearish trend is regaining strength. We will watch out for RSI crossover below 30 points which we expect to be accompanied by further selling pressure that will ultimately drag BTCUSD below 40 000 USD.

Illustration 1.02

Illustration 1.02 shows the daily chart of RSI (of BTCUSD) that is due to perform a crossover below 30 points. Such an occurrence would be very bearish for BTCUSD.

Technical analysis - weekly time frame
RSI is bearish. MACD and Stochastic are also bearish. DM+ and DM- exhibit bearish conditions. ADX is relatively low which coincides with BTCUSD trading sideways prior to bearish breakout from the neutral zone.

Illustration 1.03

Picture above shows the daily chart of BTCUSD. It also shows particular support and resistance levels.

Support and resistance
Short-term support can be found at 41 967 USD. Support 1 sits at 39 573 USD and major support level sits at 28 600 USD. Short-term resistance lies at 45 478 USD. Resistance 1 lies at 48 834 USD and Resistance 2 sits at 52 956 USD.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not serve as a basis for taking any trade action by an individual investor. Your own due diligence is highly advised before entering trade.

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