Analysis for Bitcoin situation, and a look into the future for the week ahead.
In this post, I applied the following tools: candlestick analysis, all-round market view, market balance level, oscillators, trading volume.
After another week ended, it’s about time we analyzed the results of trading Bitcoin, as the main measurement of the cryptocurrency market situation.
The last forecast suggested a possible correction that should have reached 8800 – 8100 USD. In fact, we see the intermediate targets have been reached and the ticker is again in the suggested range, having approached its lower border.
Finally, the last week’s low is at 8,204, high – at 9,677.
It is interesting that in the weekly timeframe, the price closed below the market balance level, below 9,039, which is a bearish sign.
The candlestick itself has a big black body that covers the last candle body and breaks through its low.
All of this is quite a bad sign that makes Bitcoin far less likely to start growing, amid the start of the famous conference in New York.
Finally, I’ll mark Keltner channel’s borders. The lower one is up at 7,035, and the upper one is down, at 11,043. If we take another look at the chart, we can see that the channel has been narrowing by the week since the month started. This means, the volatility decreases.
If we extend this move, correcting it with the use of trend lines along the last month’s extremes, we’ll have a big triangle that suggests the market potential switch to the sideways trend for the next few months. Continuous decline in trading volume (marked with the red arrow above) indirectly proves this idea. If we look at two-week timeframe, we could just turn into real pessimists.
If the price moves along the borders, we have drawn, and the recent week closes near 7000 USD, we will face the trend extension Falling Three Methods pattern; in this case, it will indicate the continuation of the decline. This pattern often repeats, so moving along the narrowing channel’s borders, the BTCUSD can draw a similar Falling Three Methods pattern. If this signal is followed by the breakout from above, we can really see the new lows at about 4000 USD.
This scenario might be implemented; however, I should note that the market at its equilibrium level in the two-week timeframe, and until it passes over the moving average, we can hope for a better scenario, where the ticker should be trading in the long dull sideways trend, followed by the price surging up (see the chart below).
If so, the market may well be consolidating until autumn, and then, it could start testing new highs.
If we look at the daily chart, candlestick patterns will suggest nothing new. But it is interesting to analyze volatility. In the chart above, we see in the bottom window of ATR, average true range, an indicator that shows the average volatility during a certain period of time.
According to it, the ticker is now entering the consolidation zone, it was before the winter rally of 2018 started. The volatility decline down to the lower border, the highlighted zone in the red box, can trigger a momentum. The momentum direction for Bitcoin is easy to suggest, for Bitcoin is by nature bullish, so it will hardly drop on the momentum in the daily timeframe.
Another interesting signal, we can currently define in the daily chart, is the accumulation in the RSI stochastic.
In the chart above, we see a good example in December, 2017, when Bitcoin price started correction after it had reached the high at 20,000 USD.
At that moment, stochastic dived rather deeply, and then it started to fluctuate at the window bottom borders, drawing something like a Megaphone pattern, a broadening triangle. That in no way suggests the trend will reverse, but it offers bulls an opportunity to regain their positions a little.
Let’s go on. In 12-hour chart, we see that the situation looks confusing.
MACD lines indicated strong divergence a week ago, and the ticker is working it out now; but RSI stochastic is already in the oversold zone and is going to get corrected. However, we should take into account the oscillators properties that can restore in the sideways trend.
In theory, this divergence stops working if there emerges a new divergence signal; however, neither in 12-hour chart, nor in 4-hour one, there no signals like that (see the chart below).
Therefore, we shouldn’t expect any reversal moves now, according to technical analysis.
Taking it into account, some experts sound very strange, announcing Bitcoin growth up to 15,000 USD amid the conference Сonsensus 2018.
This announcement indicates that there is a big seller that is dumping Bitcoin, not allowing it to rise somehow.
In this context, the news in the cryptocurrency media about the rise up to 12,000 – 15,000 looks a complete fantasy. In addition, I won’t be surprised if the gossip is spread on purpose to grab more money.
Finally, I see two possible scenarios. Both of them suggest the sideways trend for the next few days.
In the first case, the sideways trend will continue for at least a few weeks. Here, we need carefully monitor the trading volume, close to 8,200 USD. If Bitcoin is bought out in a good volume, when just approaching the level, it can well jump up to 9,000 USD in future. If trading flat continues for long a longer period of time, the price can drop lower.
In the second case, the price will break through the local low at 8,205 and continues going down to 7,800-7,500 USD.
However, in both cases, we can’t speak about strong trend moves, as the above targets just define a wide trading rage, rather than suggest its breakout.
So, the final price prediction for the next week is trading flat.
Key levels for the week:
8 205 – first support level, highly likely to be touched by the price.
7 510 – second support level, less likely to be touched.
8 760 – first resistance level, highly likely to be touched by the price.
9 000 – second resistance level, less likely to be touched.
I wish you good luck and good profits!
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.