Bitcoin ready to break from descending wedge
- Bitcoin is driven by a combination of factors.
- BTC has moved closer to critical resistance level.
Bitcoin (BTC) has printed the sixth bullish candle in a row and taken down several important resistance levels on its trip to the north. Concerns about a military conflict between the US and Iran are considered among the factors behind the sharp growth of the cryptocurrency markets.
It is not all about geopolitics
Experts believe that Bitcoin behaves like a safe haven, attracting capital flows in periods of uncertainty. Also, being free from political control, Bitcoin is regarded as an insurance against sanctions, frozen bank accounts and other hostile actions of the governments that may deprive people of access to their money.
However, geopolitics is not the only factor behind BTC stellar growth. Emmanuel Goh, who runs crypto derivatives tracker Skew, points out to the so-called January effect.
Bitcoin and gold are well supported due to rising tensions between the US and Iran. Professional investors are also back from the Christmas break and starting to deploy capital – this is called the January effect in the stock market.
Apart from that, traders note that the momentum might have been triggered by USDT market capitalization adjustment on CoinMarketCap, as trading bots interpreted the sudden increase of Tether's market value as a buy signal.
BTC/USD: technical picture
The world’s largest cryptocurrency hit $8,464 during early Asian hours before retreating to $8,348. The coin is trying to break the critical resistance created by the upper boundary of a descending wedge (currently at $8,350). Once it is out of the way, the upside is likely to start snowballing with the next focus on $8,450 (the recent high and 50% Fibo retracement) and psychological $9,000. If it is cleared, SMA200 (Simple Moving Average) daily at $9,200 will come into focus.
On the downside, the initial support is created by a psychological $8,000. It is reinforced by SMA100 daily and the upper line of the daily Bollinger Band located around this barrier. Once it is broken, the sell-off may continue towards $7,700. This support is created by SMA50 weekly. A sustainable move below this barrier will bring $7,300 back into view. This area served as an upper boundary of the recent consolidation channel, now it is strong support with a combination of SMA50 daily and the middle line of the daily Bollinger Band located on approach.
BTC/USD daily chart
Author
Tanya Abrosimova
Independent Analyst
