Bitcoin Forecast: Hovering Above Short-term Support

BTC/USD has drifted a little bit lower during the trading session on Monday, losing 1%.

We are sitting in an area that has been supported a couple of times in the past, and now looks to be important from a short-term perspective.

The $21,000 level has been an area that people have been fighting over for a while, so it does make a certain amount of sense that we would see this market mess about in this area.

I anticipate that there is probably a lot of support extending down to the $20,000 level, so in this area, I would anticipate that there probably will be plenty of buyers. However, if we do break down below the $20,000 level, it is likely that the Bitcoin market will start to fall rather drastically, and probably drag the rest of the cryptocurrency market with it. It is worth noting that the US dollar is strengthening quite drastically, and therefore will have an effect on Bitcoin. Furthermore, as monetary policy continues to tighten, people will worry about risk appetite. Risk appetite falling leads to lower pricing of Bitcoin and other cryptos in general.

Rallies at this point will more likely than not end up being looked at with suspicion, with the 50 Day EMA sitting just below the $24,000 level offering a bit of resistance. Beyond that, we have the $25,000 level, which has recently offered quite a bit of selling pressure. Because of this, I think you need to keep looking at this market through the prism of one that is in a downtrend, and that has not changed. In fact, its very likely that we will continue to see a lot of negative pressure, and a breakdown below the $20,000 level could kick off a bigger move to the downside. If that happens, we could see Bitcoin unwind all the way down to the $12,000 level over the longer term. It is worth noting that the $12,000 level with where the entire bullish run had kicked off from.

On the upside, if we can clear the $25,000 level, then its likely that we will go looking to reach the $28,000 level, which is the beginning of a major area of noise that extends all the way up to the $32,000 level.