Bitcoin price was sold off after a local wave high was made to a 4.618 Fib level just above $291. A price correction is now being traded below $290 and it could see retracement to $285. Technical analysis looks at significant levels in the chart, as well as potential paths of price during the coming weeks.
Bitcoin Price Analysis
Time of analysis: 05h56 UTC
Bitstamp 1-Hour Chart
From the analysis pages of xbt.social, earlier today:
Price was sold off after a local wave high was made to a 4.618 Fib level just above $291.
The decline – from yesterday’s high to near $286 – is now pushing higher in what could be a B wave. Once completed, the B wave may see a C wave drop to the Fib line crossing through $284 directly below.
The reason for expecting another wave of decline is that the decline appears to have pushed lower in one subwave – we expect to see at least three subwaves (a zigzag). RSI (second panel from top) shows no divergence on yesterday’s low and the two fastest stochastics (top) have not yet grouped at the bottom of their range.
A move lower will have a corrective function and is unlikely to threaten the resumption of decline. This view is based on the fact that price is positioned above the 20-period moving average (20MA) and 200MA in both the 4-hour and 1-day charts. Once the correction is over advance should resume to the target zones derived from Fibonacci extensions.
The first target zone is between $297 and $304. Besides the reaction implied by the various Fib extension levels present in this chart area, the zone may see added contention because
- $300 is psych level with a long-term resistive role, and
- profit taking around $300 should be met with many buyers optimistically coming in below price.
The contention around $300 may last for a while.
If trade can push above the $300 area, then the next strong level of resistance is at $310 where two Fib extensions overlap. $310 could turn out to be a strong resistance ceiling. Should price push above it in the coming week, then $360 and other fantastical upside targets open up, but failure to advance beyond $310 could feasibly see a frustrated sell-off to 1-day support lower in the chart (e.g. $250) before price resumes advance. For the technical analysis that informs this outlook see this xbt.social Analysis Update (16h00 UTC).
A final observation is that the wave pattern established during the prior consolidation seems to be the fractal basis for the current wave shape. Notice the wave shape circled in light blue, and its rounded advance, followed by a spiking wave higher, and then complete retracement of the advance! If we are at the foothills of a much larger rally, then the same wave pattern could unfold at the current degree of trend. This is just a caution that is evident in the chart, and it may not realize.
Experienced traders control risk, inexperienced traders chase gains. – Jim Rohn
Bitcoin price advance has targets at $300 and $310. Both these levels may see contention and either could, potentially, serve as a ceiling on immediate advance and hold price back for an extended period. During the coming weeks there is also the risk of a rapid return to support lower in the chart. For now we keep our focus on $300, since the market is clearly approaching it with some trepidation, and uncertainty fosters selling behavior.
Bitfinex orderbook depth and Buy/Sell Volume:
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Bitcoin price charts from TradingView.
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