BITCOIN What happens if 30k breaks?

A lot of market participants are calling for a firm end to Bitcoin's (BTCUSD) rally around the 30k mark. Who can blame them? Bitcoin has been on a very aggressive rally since the start of the year with its price in the low 16000s at the time. As we pointed out at an earlier analysis however, the breaking and closing of a 1W candle above the 1W MA50 (blue trend-line), set in motion the 2nd phase of this rally towards $30000.

** Former Support Zone turned into Resistance **
This is the level that most are afraid of and rightly so as the broader range of 29500 - 32500 is the former Support Zone (now Resistance) of the Bear Cycle, the Zone that initially supported the first sell-off and closed all candles above it for many months. When it finally gave in in May 2022, BTC entered the 2nd, most aggressive but final phase of the Bear Cycle. In fact, such Zones were present in BTC's previous Cycles. The Resistance Zone in 2019 was within 5800 - 6200 while in 2015 with 350 - 410.

** The 0.5 Fibonacci **
What's perhaps more important than this Zone itself, is the 0.5 Fibonacci retracement level since the Cycle's top. On the current Cycle that's at $32800. In these past two Cycles, when Bitcoin closed a 1W candle above the 0.5 Fib, the price rallied and hit the 0.786 Fib in 6 and 8 weeks respectively! The 0.786 Fib on the current Cycle is at $50000.

But why do we give more weight to the 0.5 Fib instead of the Resistance Zone around the 30k mark? Because even though in the previous Cycle on the week May 06 2019, BTC broke above it and aggressively extended the rally, in the Cycle before on the week of November 02 2015, it broke (even above the 0.5 Fib) but got sold massively only to close the 1W candle back below it. As a result, a closing above the 0.5 Fib would be a more accurate signal.

Notice also that by the time the post 0.5 Fib rally reached the 0.786 level and peaked, the 1W RSI was at or slightly above 80.00 (obviously massively overbought). A strong medium-term sell/ take profit signal.

But what do you think will happen if 30k breaks? Will it rally to 50k and the 0.786 Fibonacci or pull-back and and consolidate for a multi-week period until it does so? Feel free to let us know in the comments section below!

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