Bitcoin has beaten all the major asset classes hands down in 2021. The digital currency has had good momentum coming into the new year. It has surpassed the level of USD 50,000 and establish a record high of USD 52,433.0 on Bitfinex (as on 18 February 2021 12:15 PM AEDT).
The depth and magnitude of the economic drop-off due to the COVID-19 outbreak was unprecedented, leading to a lot of quantitative easing, which has prompted central banks across the world to create money out of thin air, seeding a monetary inflation.
The price of the asset is now somewhat stalling after a good rally. However, post such strong moves, the focus of professional traders usually shifts towards risk management as against extending profits.
Let us gauge the market participants’ mood via technical charts and see if there is more room for bulls to charge or should they thread the cautious path.
BTC Daily Price Chart (Image Source: Refinitiv Eikon Thomson Reuters)
On following the daily chart, it could be seen that the currency is currently moving in a major uptrend with prices trading above both 200- and 50-days exponential moving averages. The moving averages are also sloping upwards depicting momentum.
The current rally in BTC started somewhere from late November 2020, the currency has seen many accelerated short-term trends, which has drastically increased the gap between the entry and potential stop losses for investors.
- At present, the currency is closely trading near the +2 Standard Deviation of the 20-day simple Bollinger Band®, suggesting that the major volatility in the currency has been more towards upside over the past few trading sessions.
- The same could be confirmed by noticing an upward slope in 14-day ADX amidst of an increasing spread between the plus DI and minus DI.
- On applying the volume indicator, i.e., OBV, it could be seen that the indicator is moving in tandem with the price action, suggesting that the currency is rising on a large market participation.
- The primary support for the currency is now at the upward sloping trendline passing through the mean value of the Bollinger Band®.
- A break and price action below the same could lead to a possible correction in the currency to its preceding support at USD 37,880.
- On the bullish side, another volatility breakout along with large participation could further seed bullish sentiments.
BTC Weekly Price Chart (Image Source: Refinitiv Eikon Thomson Reuters)
On following the weekly chart, it could be seen that Bitcoin is currently trading above Span A of Ichimoku Cloud, which itself is trading above Span B, supporting the uptrend.
- Also, while the currency is trading above Span A, it is doing so with a positive crossover between the conversion line and the base line, suggesting that bulls are currently dominating the front.
- Both technical indicators are moving in tandem with the price action.