Bitcoin has seen a small 0.33% price hike over the past 24 hours of trading (at the time of writing). The leading cryptocurrency is currently exchanging hands at a price of $6744 after seeing a 5.05% price hike over the past 7 trading days.
What’s been going on?
Bitcoin has finally broken higher from the range that it was bound between over the past week despite the rejection of the latest proposed ETF. The highlighted range was between $6129 as the lower boundary and $6622 as the upper boundary.
What happened with the ETF decision?
The nine proposed ETF’s from ProShares and Direxion were rejected last week on the basis that they are all dependent on derivatives and the BTC futures market. However, it seems the market was expecting this rejection as the price rallied slightly after the announcement and did not dump.
This could be a sign that speculators are becoming less reliant on an ETF approval for the next price rally to occur.
Where is Bitcoin currently ranked?
Bitcoin is currently still holding its number 1 position in terms of overall market cap size across the entire industry. Bitcoin currently has a total market cap value of $116 billion after seeing a 17.74% price decline over the past 30 trading days.
Let us continue to analyse price action over the short term.
BTC/USD – MEDIUM TERM – DAILY CHART
A brief catch up
In our last analysis, be sure to catch up here, we had mentioned that the market was trapped within the highlighted range and any upside was limited until the market would break above the $6622 handle.
We had then gone on to mention that if price action could break above the resistance at $6622 we expected further resistance to be located at $6848 followed by the $7000 handle.
So what actually happened?
We can see that over the past trading week price action for Bitcoin has finally broken above the highlighted resistance at $6622. We can also see that on August 22, 2018, price action spiked and hit resistance slightly above our expected resistance level at $6848 to meet resistance highlighted by a previous long term downside 1.272 Fibonacci Extension level priced at $6915.
Where are we now?
Price action for BTC has since fallen ever so slightly to trade around the $6735 handle. The market has sustained a break above the $6622 handle which should now act as future support going forward.
Where can we go from here?
Over the past 3 trading sessions, BTC has been trading within a newly established range between $6622 and $6800. If the bulls can continue with their recently gained bullish momentum and push the market above the $6800 handle we expect immediate resistance to be located at the .618 Fibonacci Retracement level (drawn in red) priced at $6848.
Further resistance above this level can then be expected at the previous long term downside 1.272 Fibonacci Extension level priced at $6915 followed by the .5 Fibonacci Retracement level priced at $7165. It is important to highlight that the .5 Fib Retracement level will require significant momentum to overcome due to the 100 day moving average currently hovering within this price area.
The last 2 areas of resistance we would like to highlight is located at the .382 Fibonacci Retracement priced at $7481 followed by the long term downward sloping trend line which forms the upper boundary of the triangle. You can learn more about this long term triangle in our previous BTC analysis articles here, the long term analysis is still relevant today.
What if the bears regain control?
In the event that the bears manage to regain control within the Bitcoin market, we expect immediate support to be located at the previous resistance level of $6622. If the bears can push price action below this level further support is expected at the .786 Fibonacci Retracement level (drawn in red) priced at $6398.
Support located below $6398 is expected at the .886 Fibonacci Retracement level at $6129 followed by the psychological round number handle of $6000. The final support level for us to highlight is the lower boundary of the long term triangle overviewed in our previous articles.
What are the technical indicators reading?
The technical indicators are currently showing signs that favours the bulls. This week, the RSI has managed to break above the 50 handle indicating that the previous bearish momentum has subsided and that the bulls are starting to regain some traction. If the RSI can remain above the 50 handle we can expect this market to continue to make some gains.
Similarly, the moving averages are beginning to show signs that will strongly favour the bulls as they poise themselves to print a bullish crossover signal. The 7 day EMA (blue moving average) is currently trading directly on top of the 21 day EMA (purple moving average). If the 7 day EMA can cross above the 21 day EMA this would signal a bullish crossover which would signal that the bullish pressure is seriously beginning to build. However, it is important to wait for the moving averages to diverge away from each other to be certain that the signal is not a false signal as occurred during the second week of July 2018.
Let us continue to quickly analyse price action from a shorter time frame for those that cannot keep their eyes off the chart!
BTC/USD – SHORT TERM – 1HR CHART
What’s been going on recently?
Analysing the market from a short term perspective such as above, we can see that price action has recently experienced a small bullish run as the market started from a low of $5858 on August 14, 2018, to a high of $6899 on August 22 2018. This was a price increase totalling 17% from low to high.
We can see that, after placing the high, price action rolled over and fell to find support at the short term .618 Fibonacci Retracement priced at $6256 before rebounding once again. We can see that during the rebound, price action managed to create a sustained break above our previously highlighted resistance area of $6622 as it now trades around $6735.
Where can we go from here?
From a completely short term perspective, if the BTC bulls can sustain their recently seen pressure then we expect the market to continue higher to meet resistance at a 1.272 Fibonacci Extension level priced at $6868. Further resistance above this level can be expected at the 1.414 Fibonacci Extension level priced at $6981 followed by the 1.618 Fibonacci Extension level priced at $7142.
Alternatively, if the Bitcoin bears re-enter the market we expect immediate support to be located at the .382 and the .5 Fibonacci Retracement levels priced at $6501 and $6379 respectively. Further significant support below this level can be expected at the .618 Fibonacci Retracement level of $6256 followed by the .786 Fibonacci Retracement at $6081.
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