Bitcoin price crossed above resistance this week and is now straining to make a new high. Upside may continue but the indicators say the bulls may only have resources for one or two more highs.
Bitcoin Price Analysis
Time of analysis: 14h06 UTC
BTC-China 1-Hour Chart
From the analysis pages of xbt.social, earlier today:
The current upside wave is running out of time. It may still push to $260 and 1700 CNY but, eventually, it must correct as each wave before it did.
There is no doubt that the upside has accelerated, as can be seen from the distorted wave pattern circled in magenta. This upward bias is present in all the charts except the OKCoin 3Mth which has only made lower highs for the past two days.
The reversal could be sudden or it may be gradual as a Mekong mist, but it should pull price all the way back to $250 and 1600 CNY. The urge to join trend now, to the upside, is great but traders should avoid the temptation to long the fading trend. The risk of reversal increases with each new high. It had been our xbt.social plan, all along, to join the trend if support at $250 and 1600 CNY was successfully tested, yet, the bulls have over-egged the pudding and have, apparently, gone too far, too fast in their excitement.
Patience is paramount in this irrational market, price cannot run to the new moon without correcting first, as divergence in the 1-hour, 4-hour and 1-day charts shows.
Formal education will make you a living, self-education will make you a fortune. – Jim Rohn
Markets are often described as a “zero-sum game” because for each buyer there must be a seller, and vice versa. If you and I were the only traders in the world I could only buy or sell what you were offering. With block chain mining adding ~3600 bitcoins to the market every day, and with some exchanges and brokers offering 20:1 leverage on bitcoin trades, this market is not zero-sum. To run it up takes great effort and much BTC resources.
The strain of the past two months illustrates this dynamic, and the bullish camp must, conceivably, be running out of buyers. Each wave has retraced ~50%, meaning half of the bulls have not taken profit. As advance, more and more, strains to make progress, their only option will be to abandon their effort at massaging the herd into a stampede and to resort to selling.
Every bitcoin speculator wants to see a free-flowing advance with mass participation and $100/day progress – as is bitcoin’s potential – but the current advance-by-hearnia is not it and does not inspire confidence that price will reach $650 where the majority bought, last time, in the hopes of renewed advance. The largest players should play more gently and not show desperation by framing forced advance on BTC/CNY traders. Speak out against those who devalued this innovation, discredit them, and avoid the looming terminal decline.
Bitfinex orderbook depth and Buy/Sell Volume:
What do readers think? Please comment below.
Readers can follow Bitcoin price analysis updates every day on CCN.LA. A Global Economic Outlook report is published every Monday.
The writer trades Bitcoin. Trade and Investment is risky. CCN.LA accepts no liability for losses incurred as a result of anything written in this Bitcoin price analysis report.
Bitcoin price charts from TradingView.
Image from Shutterstock.