Bitcoin price is sitting high and dry between two converging envelope lines near $265 and 1650 CNY. After the Greek referendum catalyst had pushed price to an intra-month high, it is now evident that Greece remains Europe's problem and negotiations have restarted (again). This lull…
Bitcoin price is sitting high and dry between two converging envelope lines near $265 and 1650 CNY. After the Greek referendum catalyst had pushed price to an intra-month high, it is now evident that Greece remains Europe’s problem and negotiations have restarted (again). This lull and return to the status quo in the global economy may express itself in the Bitcoin chart as a period of sideways price action.
Time of analysis: 04h56 UTC
From the analysis pages of xbt.social, earlier today:
Price has declined more rapidly – but not a greater distance – than in previous corrections during this advance.
The above chart shows the location of price action above the 1-day chart’s 100MA 10% envelope (light blue).
Although price has not yet touched the upper envelope line in any of the exchange charts we can assume that the market will eventually test this level near $262 (Bitfinex) and 1630 CNY (BTC-China).
The RSI indicator (second from top) shows divergence to the advancing price wave but neither MACD (bottom) nor the xbt.social stochastic indicator (top) confirm the divergence at this time. Ordinarily, this would create some expectation of another wave to the upside – until all the indicators confirm the divergence. However, price is now trapped between two envelope lines: the 1-day 200MA 10% envelope (that halted advance to the upside, not shown) and the 1-day 100MA 10% envelope below.
It is futile to try to predict what the market will do in this circumstance, and the best we can do is to anticipate scenarios and then prepare to trade the confirmation signals of the scenario that the market pursues.
Located between two envelope lines, the most self-evident scenario is that price winds sideways, between them, and then chooses direction later – either gradually or via a breakout. The direction that the market chooses gives us the additional scenarios:
Advance: The 1-day 200MA (and its envelope) is currently descending. Within 30-60 days it would have leveled out and begun a slow ascent. Price may follow this moving average to the upside in a gradual advance to $300 and above. Another possible outcome of consolidation is breakout but this outcome is less likely given that, during advance, price usually makes sudden breaks toward the 1-day 200MA and not away from it. Gradual advance may haul the greater price distance, so a scenario whereby price advances immediately (within days) will most likely see a strong reversal near $300 and a return to the 200MA.
Decline: following consolidation a declining price wave is most likely to happen via breakout to the downside as price drops through the 100MA 10% envelope below. Targets would be $240 and $220. Immediate decline (within days) is another potential outcome. Without sufficient pressure having built up this scenario may see price lack momentum and the decline could be messy. This is the least favorable outcome for traders who try to short the decline but a good means of building a long position (given patience).
No profession requires more hard work, intelligence, patience, and mental discipline than successful speculation. – Robert Rhea
A few scenarios for the Bitcoin chart are outlined above. Unless there is a catalytic event on the world stage, or an unexpected twist in the Greek odyssey, we could expect a quiet and reflective phase in the Bitcoin chart during the coming weeks.
Bitfinex orderbook depth and Buy/Sell Volume:
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Bitcoin price charts from TradingView.
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Last modified: January 25, 2020 11:08 PM UTC