Bitcoin 'Doji' points to bullish reversal scenario as BTC holds $36K support

Published at: Jan. 28, 2022

It is not too late for Bitcoin (BTC) to reclaim its bullish bias as it halfway paints an indecisive 'Doji' candle on the weekly chart.

In detail, Bitcoin's price correction this week to below $33,000 had it form a lower wick, suggesting that bulls bought the dip. A sharp retracement ensued and took BTC price to as high as $38,960 on Jan. 27. However, the bulls failed to hold the said week-to-date top for too long, resulting in another wick, but also pointing to the upside.

BTC price has since corrected to near its weekly opening rate of $36,200. In doing so, it has formed a transitional candlestick, called "Doji," that reflects indecision between bears and bulls. If found at the bottom of trends, Doji candlesticks could signal the reversal of price direction.

The $30K support sticks

Bitcoin has been trending lower since it established its record high at $69,000 in Nov. 2021. In doing so, the cryptocurrency wiped more than 50% of its profits, even dropping below its 50-week exponential moving average (50-day EMA; the red wave), a support key support level.

But Bitcoin's strongest interim support comes in at $30,000, a level that has been capping the cryptocurrency's downside attempts since Jan. 2021. Notably, in May-July 2021, the level was instrumental in attracting accumulators that helped the BTC price climb to its record high.

"If the support around $30K holds, it's possible we will see a strong upward trend resuming," noted Crypto Batman, a pseudonymous market analyst.

Additionally, a Doji formation ahead of the BTC price hitting $30,000-support shows a weaker bearish sentiment near the level.

Bearish outlook

On the flip side, Bitcoin's bullish outlook may fizzle out if its price drops decisively below $30,000.

In detail, Bitcoin's weekly relative strength index is currently near 38, and still heading toward its oversold territory below '30.' It shows that the BTC price still has room to continue its decline in the coming sessions, at least until it tests $30,000.

Meanwhile, a close below $30,000 puts Bitcoin at the risk of falling towards its 200-week exponential moving average (200-week EMA; the blue wave in the chart above) near $25,000. That is primarily due to the wave's history of ending bearish cycles in 2018 and 2019, which followed by sharp retracements to new record highs.

Fundamentals support a downside scenario

This week, Bitcoin wobbled between extreme highs and lows due to the suspense around the Federal Reserve's rate hike plans for 2022 to combat inflation. On Wednesday, the cryptocurrency's gains fizzled out after the U.S. central bank confirmed that it would raise interest rates in mid-March.

Jerome Powell's press conference after the statement further revealed the Fed's likelihood to increase rates after every policy meeting for the rest of the year. The Fed chairman admitted that the inflation outlook had worsened since their policy meeting in December, underscoring that the ongoing supply chain issues may not get resolved by the end of 2022.

Reading the Powell transcript now. I think this was a good question from @colbyLsmith and a helpful answer from Powell in terms of understanding the FOMC's thinking. pic.twitter.com/KDizwQf4Jr

— Joe Weisenthal (@TheStalwart) January 26, 2022

Bitcoin see-sawed in the hours leading up to the Fed's statement and during Powell's conference Wednesday afternoon. It briefly jumped to almost $39,000 after the central bank released its policy decision but started falling after Powell started speaking to journalists later in the afternoon.

Independent market analyst CryotoBirb played down the fears surrounding the Fed's tightening policy, stating that the central bank would not take "a destructive approach towards financial markets."

Related: Is the bottom in? Data shows Bitcoin derivatives entering the ‘capitulation’ zone

The chartist noted that a Fed-led stock market collapse would look bad on the politicians, which may leave the central bank with the option to only bring "short-term bearish implications" to the risky markets, followed by strong medium-term increases.

"It is also worth adding into the larger context that Bitcoin has freshly taken advantage over the equities, and while the stocks tumbled down, Bitcoin took off to the upside," he added.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Tags
Related Posts
Boom or bust? Is there a way for Bitcoin price to hit $100K in 2022?
The internet is filled with Bitcoin (BTC) price forecasts. For example, some analysts believe that the flagship crypto will hit $1 million per coin in the next 10 years, while others think BTC price will eventually drop to zero. Without dwelling on predictions that are five or more years ahead of us, let us focus on what Bitcoin could do, say, in the next six months? Again, the forecasts vary drastically. For instance, Antoni Trenchev, the founder of Nexo Finance, sees Bitcoin price hitting $100,000 by mid-2022. On the other end of the spectrum is Sussex University professor Carol Alexander, …
Bitcoin / Jan. 25, 2022
3 reasons why Bitcoin price rallied toward $45K entering March
Bitcoin (BTC) extended its gains nearly hitting $45K on March 1 as interest rate speculators reduced their bets on aggressive rate hikes in 2022, the number of whale addresses spiked, and amid speculations that BTC is proving itself as an apolitical safe-haven. Traders reduce half-point bets for March BTC's price surged more than 4% to reach nearly $45,000, a day after recording its biggest one-day increase since February 2021 as a flurry of sanctions on Russia, including a ban from accessing the global banking system SWIFT, raised concerns over their impact on global growth and inflation. For instance, swaps tied …
Bitcoin / March 1, 2022
Bitcoin may lose $30K price level if stocks tank, analysts warn
The ghost of stock market crash is back again to haunt Bitcoin (BTC). It happened last in March 2020. Back then, the prospect of the fast-spreading coronavirus pandemic led to lockdowns across developed and emerging economies. In turn, global stocks crashed in tandem, and Bitcoin lost half of its value in just two days. Meanwhile, the U.S .dollar index, or DXY, which represents the greenback's strength against a basket of top foreign currencies, has now climbed by 8.78% to 102.992, its highest level since January 2017. The huge inverse correlation showed that investors dumped their stocks and Bitcoin holdings and …
Bitcoin / June 19, 2021
Bitcoin crash ahead? Expert warns higher inflation could whip BTC price to $30K
Bitcoin (BTC) may end up falling to as low as $30,000 if the U.S. inflation data to be released on Wednesday comes any higher than forecasted, warns Alex Krüger, founder of Aike Capital, a New York-based asset management firm. The market expects the widely-followed consumer price index (CPI) to rise 7.1% for the year through December and 0.4% month-over-month. This surge highlights why the U.S. Federal Reserve officials have been rooting for a faster normalization of their monetary policy than anticipated earlier. Further supporting their preparation is a normalizing labor market, including a rise in income and falling unemployment claims, …
Bitcoin / Jan. 9, 2022
The US Federal Reserve is making some analysts bullish on Bitcoin again
Signs of a steady Bitcoin (BTC) price recovery emerged earlier this week as investors shifted away from the U.S. dollar on weaker-than-expected economic data. In detail, Bitcoin's drop last week to below $33,000 met with a healthy buying sentiment that pushed its per token rate to as high as $39,300 on Feb. 1. As of Thursday, BTC's price dipped below $37,000 but was still up 13% from its local bottom. Meanwhile, the U.S. dollar index (DXY), which measures the greenback's strength against a basket of top foreign currencies, rose to 97.441 last Friday, logging its best level since July 2020. …
Bitcoin / Feb. 3, 2022