Bitcoin Stabilizes After Sell-Off, Resistance Near $45K-$50K

Oversold signals remain intact, although upside is limited.

Jan 6, 2022 at 7:25 p.m. UTC
Updated Jan 6, 2022 at 10:26 p.m. UTC

Bitcoin (BTC) dipped below initial support at $45,000 on Wednesday, but later stabilized around $42,000, which is near the Dec. 5 crash low. Oversold signals remain intact, which suggest selling pressure could subside.

Given the series of lower price highs since November, support ranges and oversold readings are viewed as countertrend. This lowers the probability of significant buying strength until the downtrend is reversed.

There is strong resistance ahead which could limit upside moves over the short term. For example, price momentum turned negative on the monthly chart, indicating a possible trend shift from bullish to bearish.

Further, bitcoin remains stuck below key moving averages and is roughly 35% below its all-time high around $69,000.

The cryptocurrency is down about 8% over the past week as buyers failed to sustain a break above $50,000.

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Damanick is a crypto market analyst at CoinDesk where he writes the daily Market Wrap and provides technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio manager at Cannon Advisors, which does not invest in digital assets. Damanick does not own cryptocurrencies.