Bitcoin Price Analysis – Record Highs

Bitcoin made another large leg up this week from ~$1333 to 1628, according to the BLX, which was led by a >$100 premium on Bitfinex. There was also a large influx of volume on Coinbase and GDAX, suggesting a large quantity of new or existing users on-ramping through a fiat gateway. Network Hashrate is currently unchanged from last week, having increased 51.58% year to date, but is slated for a 5.54% increase this week.

Block support for SegWit and Bitcoin Unlimited continues to perambulate around 40-50% with no obvious resolution in the near future.

Nodes however, continue to remain firmly in support of SegWit, with a large number of nodes continuing to signal for UASF.

Reported trading volume continues to be dominated by feeless BTC/JPY exchanges.

Globally, price is averaging in the mid $1500s, with CNY about $300 below average. This is likely due to continued regulatory restrictions and increase KYC/AML requirements for trading on domestic exchanges. New all-time highs in all currency pairs were established this week.

Despite a continued halt in USD deposits and withdrawals on Bitfinex, the premium between Coinbase/GDAX (blue) and Bitfinex (red) has been eliminated. Quarterly OKcoin futures (yellow), which has typically held a large premium in prior bull runs, remains far below spot price.

LocalBitcoin volume, an OTC measure of on-ramping, continues to surge globally with new volume ATHs recently established in Australia, Dominican Republic, Mexico, Peru, and Ukraine.

Technical Analysis

When the spot price feels like it’s going in one direction, it’s always important to continue with a trading plan with targets, exits, and re-entries. Let’s take a look at the long standing Pitchfork, which helps project support and resistance from established anchor points of local highs and lows and couple this with Fibonacci Extensions of the previous ATH and low as well as yearly Pivots for some additional resistance targets.

The median line (red) gives the expected mean of the trend. Price will continually attempt to return to this diagonal. Each diagonal of the Pitchfork can be thought of as a potential reversal zone or support/resistance line. The upper blue diagonal zone being ‘most overbought,’ or the top bounds of the trend, and lower blue diagonal zone being ‘most oversold,’ or the bottom bounds of the trend.

The chart above uses Bitstamp over the BLX, because of the fit of the Pitchfork historically. It does not fit the index nearly as well, which suggests that the Pitchfork should not be used on the index.

The alignment of Fibonacci Extensions with Yearly Pivots may just be a coincidence but shows how well established the upcoming resistance zones of $1787 and $2183 are. The Pitchfork diagonal gives a time suggestion for hitting these zones around June 9th and September 2nd.

Historically, price has not remained in the upper limit of the Pitchfork for many days before returning closer to mean. Above all else, this suggests buyers should be cautious at these levels.

The daily Ichimoku Cloud continues to show TK disequilibrium, or ‘C-Clamp,’ suggesting sideways trading with a pullback to the Kijun at $1262 is more likely than continuation, although the previous C-Clamp was invalidated as well as the Bearish Divergence on RSI.

The Ichimoku Cloud is a constant, auto-drawn indicator which quickly offers an immense amount of valuable information on any time frame. The Cloud is best used at higher time frames as more data generally provides more accurate signals and less false positives.

The indicator uses moving averages and dynamic support and resistance to make projections of key zones, as well as capturing 80% of any given trend. As long as the price remains above the Cloud, sentiment remains bullish. Price in the Cloud indicates a neutral trend, and below the Cloud indicates a bearish trend.

When the Tenkan (T) is over the Kijun (K) sentiment is bullish. K over T would indicate bearish sentiment. When the Lagging Span (LS) is above the Cloud and above the price sentiment is bullish, below the Cloud and price would indicate bearish sentiment. The best entry signals for the Cloud occur when the trend is obvious, but 1 or 2 of the signals have yet to become confluent with a higher time frame trend. All signals on this timeframe are bullish and therefore should not be used as a measure of entry signals currently.

The Cloud signals on the four hour time frame are also all bullish, with no significant entry signals currently.

Based on most recent RSI data, price is currently sitting on a support zone. Should this zone break, I’d expect a test of the Kijun with a significant drop in RSI to around 20. Price remains in a triangle consolidation pattern which does suggest a bullish bias.

The one hour time frame is a consistent time frame to use the Cloud when bitcoin is trending, and shows a sideways indecisive market, again, waiting on volume to help determine a direction.

Over the past few days the Cloud has adequately provided entry and exit signals based on TK crosses and recross on this timeframe. Although the most recent bullish TK recross above Cloud did not pan out, they could be considered actionable as the bullish probability of this TK cross continues to be substantial.

Conclusion

Despite no resolution in the block size and scalability debate, Bitcoin continues to rise substantially. Global volume continues on the rise with many exchanges decoupled from each other in price due to many variables. Exchanges with fees and fiat on ramps should be seen as the most true to accurate price. Technicals are showing a continued trend nearing significant resistance. Low time frames suggest consolidation with bullish bias and further decision on a higher leg up within the next few days.