After peaking at $269 last week, right after coming up against resistance coinciding with 200 exponential moving average line, price retraced to support at $252. Quite normal after sharp rises; markets usually need to consolidate, some profit taking follows and any excess supply is exhausted before resuming a move up. Which is what happened after bottoming out at $252; price pushed up to the most recent top at $279. This rise was no different, and we now seem to be in a correction sitting above $265. It could potentially go much lower, as a correction of the larger rise from $220. More on this in our forecast.
Zooming out to 1 day charts, we can see why price halted at $ 279. The 200 day EMA line sits squarely at this zone, pushing back on further upswings. The last time it was tested was a failed attempt rise in November 2014, before that, in August when prices broke below it; we have been below it since. As a significant average line therefore, it will require some consolidation before another attempt at thrusting up.
Looking at price movement relative to February’s peak ($315) and January’s bottom ($166) using fibonacci retracement, 23.6% level as a resistance is hard to ignore. It is clear consecutive levels from $ 219 have pushed down against run ups – at times outrightly breaking past a level, and in others forcing retracements and relenting at second attempt. Visible too are encircled candlesticks patterns which are close variations of an uptrend reversal pattern known as an evening star.
While it is easy to focus on the short term frame charts, the larger picture is crucial, now more than ever as various technical levels hang on the line.
The market is within a bear channel going back to $1200 all time high (ATH) of December 2013. Here, it is clear prices movements have been restricted within this range, resulting in an 18 month bear trend. Now, there seems to be a real shot at breaking out of it via the channel in purple line. The checkered flag mark the finish line where bulls are anticipating a breakout.
For this analysis, the interest is primarily on the lower purple line support, where current price is gradually crawling up. The dotted support line has held well till now.
A closer look at where price is now (blue arrow). Breaking past this point will lead to the next logical resistance level at $ 300.
BITCOIN FUNDAMENTAL NEWS
Bitcoin friendly California Draft Legislation
Jerry Brito from Coincenter.org, a proponent of favorable regulation on digital currency believes the latest amendment to a draft California bill on a licensing regime for startups and companies in this space is good news for the ecosystem.
“a company should only need a license if they have actual custody of their customer’s bitcoins.”
This clause exempts software designers, infrastructure start ups and broadly innovators building products and services in a non custodial way.
OXI – No vote in Greece referendum fuels speculation
This week, Greece went to the polls for a referendum on the terms of an international bailout by the IMF and European Commission. Events in Europe have catalyzed speculation in bitcoin markets and possibly the recent rise in price. After a 62.5% turn out, the final count was 38.7% Yes, and 61.3% No. This has only inflated any previous speculation around bitcoin as an unassailable store of value for the rest of EU at risk, and debt-ridden Greece now facing capital controls.
BITCOIN WEEKLY PRICE FORECAST
Overall, there is certainly conviction amongst traders and across the market that we are poised for higher prices. The past 5 weeks of consecutive green candles, now almost 27% up since finding a bottom at $219, coupled with pockets of global economic uncertainty – Greece and China, this trend looks set to continue.
Targets to watch in the coming week(s) are $ 285 and $ 300 thereafter. Meanwhile, a large ascending triangle is closing in on its apex with a flat top at $ 300, visibly tested twice before. $ 300 is a very significant psychological level and will require re-evaluation once we draw near.
“The ascending triangle is a bullish formation that usually forms during an uptrend as a continuation pattern. There are instances when ascending triangles form as reversal patterns at the end of a downtrend, but they are typically continuation patterns. Regardless of where they form, ascending triangles are bullish patterns that indicate accumulation.” Stock charts
Before we get there however, it will take a series of up moves and corrective downs. The recent top at $ 279 has now retraced to $264 and looks set to go lower. Targets on this move are at $252 and lower at $240.
Medium term, support is at $226 and resistance at $ 300