Is Bitcoin Trying to Break Out?

The market is at a significant inflection point, so the next couple of days could determine whether or not we can recapture the magic.

Bitcoin rallied significantly on Tuesday as we are starting to see signs of life again in the crypto markets. A lot of this comes down to an easing of the geopolitical tensions on the Ukrainian border, and the thinking that the Federal Reserve may not be able to raise interest rates as quickly as once thought. After all, if the interest rates start to rise, that may not be a good thing for Bitcoin. Certainly, it had a lot of large money traders bailing on risk appetite as they had to cover levered trades.

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When you look at this chart, you can see that the 50 day EMA sits just above, and that is a technical indicator that a lot of people pay attention to. However, the $45,522 level features the 200 day EMA, which is a major indicator that a lot of people pay attention to. If we can break above there on a daily close, then it could open up the possibility of the markets moving towards the $50,000 level where I anticipate there will be a lot of interest.

On the other hand, if we turn around and break down below the hammer on Monday, then it is possible we could go looking towards the $40,000 level. The $40,000 level is an area that we have seen interest in the past, and I think should continue to be an area that a lot of people will be paying attention to. A breakdown below that level almost certainly means that we will test the lows again.

Unfortunately, Bitcoin will continue to move based upon the geopolitical concerns in the risk appetite of traders around the world. It does look as if we are trying to build a bit of a bullish flag though, so that is a good sign as well. Given enough time, it is likely that we will try to take advantage of that, as Bitcoin has been so oversold for so long. Do not get me wrong; this is a market that will try to continue to go higher, but it is going to be very noisy in the short term. The market is at a significant inflection point, so the next couple of days could determine whether or not we can recapture the magic.