This week, the price of bitcoin stepped up its recent momentum, shooting up from a shallow retracement bottom at $ 262, up to a new 4 month high of $ 316. 5 months since the last time this price level was breached in a failed attempt, piercing right through $ 300 resistance level was a strong indicator of intent. Last week, after a brief halt at $ 279, where resistance held back further up moves, we expected a retracement, that turned into sideways action for a couple of days. Considering the historical significance of $ 300 resistance zone, evident from 2 previous attempts this year, any retracement here is only natural and expected.
Points at which market momentum decelerates are not coincidental; technical levels, moving averages, fibonacci retracement targets, historical supports typically assert themselves on price movements. Each of these indicators sheds light on possible targets to watch on up, down or range limits for sideways price moves.
For instance, the 50 day simple moving average cuts right above $ 316 where price stopped and fell sharply to $ 281. Additionally, this level is reinforced by multiple exponential moving averages 200 day and 50 day which converge at $ 310 zone.
Crossing above or below average lines is taken as an indicator of possible change in trend. Just like previously encountered lines at $ 279 and $ 264, some consolidation is expected here, before attempting to break above these lines again. The trend we are in currently suggests this is inevitable, only a matter of when. Notably, most average lines are below price on lower timeframes, and now the weekly looks likely to follow suit.
Zooming out, $300 and $ 210 mark the upper and lower limits of a channel persistent since January; breaking out of it will be significant. Coupled with the crossing of the long term average lines (encircled) , successfully breaking above $ 316 and holding could easily push up to $ 400s. The highlighted territory is up for grabs, midway through, $ 379 is a reasonable target.
The upper log trend line of a bear channel dating back to $ 1200 high, has been overshot. Broaching this 18 month resistance is an early sign of a possible change in trend. Any calls of a final bottom at this point are pre-emptive, but it is a real possibility. Sentiment, momentum and indicators are all turning green.
Bitcoin Fundamental News
Bitcoin Price Overshoots on Huobi Exchange
On Friday, price on Chinese bitcoin exchange, Huobi, shot up to a bizarre $357 high , way above average price across global exchanges. Within hours, this spike normalized to average price at $310. High on the list of speculative reasons is the most recent 30% nose dive by Shanghai Stock Exchange and all the irrational panic that follows. The government has stepped in with controls to avert a bigger collapse in share prices as per Bloomberg. Chinese activity was attributed as one catalysts in the run up to $ 1200 all time high in 2013; thus, traders should be keen on financial market activity in China
Bitcoin Price Forecast
This week, I am bullish. It is almost clear we are in for higher prices, at least in the short term. The most recent top at $ 316, sharply fell to a low of $ 281 and is now ranging between $ 285 and $293. Like any other rapid rises, this is likely part of another retracement, similar to a others observed in the past 3 weeks after consecutive new price levels. It could swing as low as $ 263, but would not invalidate expectations of price over $ 320.
“With the bear trend beginning to disappear into the distance the way looks clear for bitcoin to continue upwards.”
“The largest impulse I have described could reach 400 possibly on wave (v), but we are in (iii) of that impulse now, give it a few days/weeks. I think more likely that we top in the upper 300s but not 400. I expect that retraces will be shallow from here on having had deep retraces all the way to this point.”
As per EW, wave 3 is expected to be the longest; we are now in the middle of its unfolding..
The overall bear channel offers a better view of where we are now. Upper and lower purple lines delineate a channel attempting to break out of long term bear channel. Consecutive green candles are approaching the mid-line where, prices should encounter some resistance. If successfully broken, the upper resistance line would be the next target. These levels reinforces targets from indicators and historical levels.