Bitcoin Price Analysis — Gearing up for the move ahead

, 29 Oct 2016 - AnalysisBitcoinPrice

 

Nathaniel Freire is a full time day trader trading Digital Assets, Forex and Stocks. Based in New Jersey, Freire specializes in technical analysis with a twist of social sentiment and fundamental analysis. You can follow Nathaniel on Twitter @Cryptocoinrun

The technical setups posted below use simple trend detection, support and resistance, channels, pattern and candlestick analysis. We aim for high-probability trade setups on BTCUSD and use very few indicators. All charts use BNC’s Bitcoin Liquid Index for maximum accuracy.

The timeframe for trades is 1 to 7 days, so we’ll use 4h candlesticks. Bitcoin is best traded as a purely speculative commodity on 4h+ timeframes.

Market Sentiment And Macro Key Points

 

This section is an overview of news headlines or events that may affect BTCUSD.

  • Chinese demand for BTC continues to be strong, with no sight of slowing down. Bitcoin price movements are strongly correlated with the recent chinese devaluations.

  • Switzerland’s national railways firm SBB announced that they will allow Swiss Francs to be exchanged for Bitcoin at their ticket machines. This is another example of a federal government accepting the idea of digital currency while embracing Bitcoin.

  • Overstock announced that they will be offering shares of their company using the bitcoin blockchain and their t0 platform in December.

Long Term Technical Analysis

 

Bitcoin Price Analysis Oct 29 2016 1
While the long term bullish trend continues to develop, an immense volume breakout has not affected the price. This is considered a bullish divergence. If sellers become exhausted in the coming weeks, the price should make new highs for the year. The current inverted head and shoulders structure is also extremely bullish, supporting the current trend.

Long Term Trade Idea

 Bitcoin Price Analysis Oct 29 2016 2

The short term chart indicates an imminent top, where bulls should start getting exhausted in the next couple of days. We should see a breakout to the .764 Fibonacci level, which happens to be $700.00. From there we are expecting a small pullback to $675.00, which should be a good entry area for long trades. $675 is a round number that holds a lot of support, and happens to be a trend line that intersects with the recent Bitcoin break out.

Short Term Trade Idea

 

Bitcoin Price Analysis Oct 29 2016 3

Zooming in to the 4hr chart gives us a better idea of what to expect if bitcoin tries to test $700.00. We can see a bearish divergence on the Stochastic indicator, which indicates the probability of a small correction, to $675.00. Waiting for the dip provides a good risk/reward ratio.

Conclusion

 

The long term Bitcoin chart is extremely bullish, with solid support for the current bull market on the form of extreme volume. That being said, Bitcoin is showing some short term divergence that needs to be resolved before the trend continues.

There are also some developments on the horizon. Segwit voting starts on Nov 15th, which is date to note. The market will typically price in before it happens, and Nov 15th will likely be a sell the news event. However, news events are also the source of volatility, and caution should be exercised.  

Disclaimer: The information presented in this article is general information only. Information provided on, and available from, this website does not constitute any investment recommendation.