The biggest cryptocurrency in the world, Bitcoin, has failed to break out from its $40000 level this week. It went through four days of continuous fall. It has slumped towards the $37000 level on Wednesday. However, the technical charts are suggesting that the overall crypto market may end its consolidation very soon.
The Bollinger bands of the broader market measure a standard deviation to move from the 20 days of simply moving average. It has started a contract in the past few weeks.
Kraken Research said in a note that the historical contraction could foreshadow an inevitable revival in the volatility of the market. Now, whether market volatility can be seen with a higher jump or not is completely unclear. But it is quite fair to say that the consolidation, which is seen from the past few weeks, must end sooner or later.
According to this note, the inability of bitcoin to hold the $40000 level is the support. It would not come up with any surprise, as the historical price action is suggesting that the bulls will struggle to get back the $40000-$42000 resistance level.
Bitcoin has become more range-bound this week. It is trading between $35000 to $45000. This asset had a rebound of around 8.5% in the mid-week. Also, it has risen to the $41300 zone.
As per the crypto exchange, ZebPay, the market stance is standing as a bullish one for the asset. At the same time, the volumes have been persistent at good levels.
“Another tweet by Tesla CEO Elon Musk suggested that Tesla would accept bitcoin as a means of transactions when miners who verify transactions use more renewable energy, leading to this uptrend. As the asset continues to ride the upward trend, whales seem to be accumulating in anticipation of higher prices, making bitcoin again the favorite of them all,” said Nirmal Ranga, vice-president of Trading, ZebPay.
In the last week, Bitcoin has made a Dragonfly Doji pattern where the lower longer shadows are indicating buying at the support zone of $31000. Also, it has surged by 33.2%, which is making up the weekly high near the mark of $41322.
On a daily time frame, this asset has faced resistance near the levels, which has made a “Spinning Top” candle. It makes it much difficult to predict the way for swinging of this asset shortly. The prices are retracing near 10% in the past 2 days. A further rally will take place if the bitcoin trades near the resistance of $42500. The first key support of bitcoin is at $34635 and then $31111. The initial resistance, on the other hand, was at $40900 and then at the level of $42500 level.