Thursday's Market Minute: Beware of A Bitcoin Breakout

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It’s been a volatile start to 2022 for Bitcoin futures with multiple rotations of 20% both up and down, but things have been a bit quieter as of late. Yesterday brought a +3.7% gain for the bulls even as the overall picture for the /BTC contract is showing smaller price swings and a narrowing range without a clear trend in either direction.

Other pieces of evidence include that most major moving averages are trending down to sideways, the MACD is bouncing back and forth between bearish and bullish in an increasingly smaller range, and a low reading on the Average Directional Index (ADX), which suggests there is little strength in either direction.

Even though this information may make it sound like there is little going on with the cryptocurrency, a period of relatively low volatility is noteworthy in trading. This is because we are now starting to see clearly defined areas for potential breakouts in either direction, namely near 45,000 to the upside and 38,000 to the downside. The 45K point has long been an important area of support and resistance, and it also happens to be roughly in confluence with the yearly Linear Regression line and the 200-day Simple Moving Average.

Meanwhile, the 38K area represents a shorter-term trendline going along the bottoms since January, as well as approximately the level of the Parabolic SAR, which is used to determine trend direction and the yearly Volume Profile’s area of heaviest trading. There are major levels of support and resistance at these points, and we could be in for an energetic breakout if either is breached.

Image sourced from Pixabay

This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.