Bitcoin price followed a gold price move that broke above resistance today. The move, in both charts, comes as a surprise and we have to adjust our outlook.
Bitcoin Price Analysis
Time of analysis: 14h00 UTC
OKCoin BTC/USD 4-Hour Chart
From the analysis pages of xbt.social, earlier today:
Bitcoin price has pushed above a constraining trendline, and this event invalidates the expectation that price was building a base for advance.
Interesting to note that the gold price surged above long-term support (at $1,150) just prior to the bitcoin price chart trendline breach. Gold price is annotated in pale blue in the chart above (taken a few minutes prior to the bitcoin price surge)
The wave up is reverse diverged to January price highs at all timeframes from 1-day and smaller.
In the longer-term 4hr chart (above) price appeared to be entering the final stages of a basing pattern, but today’s move changes this outlook. The comparative previous structure is circled on the left of the chart, where indications matched:
1) MACD (top) was tending to its zero line – indicating the decreasing price range and low volatility
2) The stochastics (second from top) were spending more time in the middle of their indicator range
3) On today’s push to a lower high, RSI is reverse diverged and is indicating a value equivalent to late January price levels. This implies price will correct downward at the current wave’s conclusion – how far and for how long will give clues as to the potential target and function of the current wave up.
The MACD compression warned of an imminent ramp-up of volatility, and the similarities to the previous base-then-surge instance in the chart, strengthened our outlook that a) price will surge, b) the surge will be to the upside, and c) the advance will travel a profitable distance. Hence, our expectation of the buy trade discussed in yesterday’s article was strengthened. Yet, the surge came sooner than expected and we must now respond accordingly.
The sensible thing to do now is to wait for the upside wave to correct downward, and to enter long once the 15min and 1hr timeframe RSI indicates downside reverse divergence and then resumes advance.
As expressed yesterday, bitcoin price has been edging closer to a watershed, and as expected, the price jump higher came as a surprise. The outlook of a large advancing wave may still be valid, but without a recognizable base, traders should be wary of a sharp reversal in the coming hours.
Bitfinex Depth Chart and Buy/Sell Volume
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Bitcoin price charts from TradingView.
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