Since the last price analysis, bitcoin continued its rally up to an all time high at $1940 on bitstamp, inches short of the $2000 level. Bitcoin is now trading $700 above the price of a troy ounce of gold at $1223. Mainstream media is knee deep into the hype, roping in new investors and curious onlookers. A CNBC article went as far as recommending Bitcoin as a portfolio protection safe haven trade. It is hard to ignore Bitcoin when price keeps making new highs which has led some analyst to speculate we are at the cusp of another parabolic rise to unprecedented highs, much similar to 2013. Are we?
Since the last price analysis, Bitcoin has gone up $600. The continuation pattern at A broke past $1392 at (1), continuing up to a correction at B. Corrections on this run up have been shallow and short lived. B did not last long before price clocked new all time highs at $1850 at C. The correction at C was concerning as is dropped sharply to $1600, leading some to suggest the long overdue correction had began.
When a sharp decline occurs, drawing out fibonacci retracement lines from peak high to peak low help identify possible retracement, support and resistance levels. The chart above had two sets of fibonaccis: one from peak $1850 to the first low at $1597, the other from the peak low at $891 to the top at $1850. Several possible patterns come into play – variations of triangles, bull pennants, head and shoulder patterns and diagonals are common. Tracing out diagonal and horizontal trend lines for channels aids in identifying what form the pattern will take, and thus, when and which direction it is likely to break.
Well the pattern resolved to another triangle. 23% fibonacci line held on the 4 hour chart, thus invalidating the other possible pattern, a larger bull pennant flag down to $1500. Breaking the other 23% fib at $1787, and holding as support would confirm further upside, leaving room for targets of up to $2000.
Price broke out of $1787, retested it and confirmed this level as support. As at writing this, Bitcoin is trading at $1954 on Bitstamp, after breaking past the previous All time high. Price is now in unchartered territory, and there are no resistance levels to look out for on this time frame going up.
The chart below is a look at the rise from $891 bottom.
It is clear the internal 5 wave count in black (i,ii,iii,iv,v) is complete, a pattern I have been looking at for weeks since $1120 at (ii). Admittedly, the count I was uncertain of the (1,2,3,4,5) count in purple. Wave 2 of (1) in purple is less common of a wave 2 retracement of wave 1 in terms of depth.
The price distance of each wave is measured as a vertical distance from the beginning of the wave to the end of the wave. 2 retraced briefly and was shallow, only retracing 23% of wave 1. Such retracements occur infrequently, with only a 12 times out of 100 appearances; 50% and 62% retracements are more common appearing 78 times out of 100; 62%+ fibonacci wave 2 retracements appear 15 out of 100 times.
The low probability appearance of this type of wave 2 led me to conclude it was not a wave 2. Now, in hindsight, i believe it was a wave 2, and i have learnt from this experience.
I recommend reading up on Wave Ratios and Measurements to see the common wave retracement levels.
Going by this count, (3?) and (4?) was the correction of the purple count, and is now headed up for a 5. The chart below shows how typical wave 4 corrections behave. They often retrace down to the region of the lower degree count wave 4, in this case wave (iv)
Winklevoss Bitcoin ETF Decision set for review
Bats exchange filed for a petition to review the Winklevoss Bitcoin ETF application on 17th March under rule 430(b)(1) of the SEC’s Rules of practice. The SEC had to consider the petition and ordered a review of the Bitcoin ETF rejection on April 24th, with a comment period set to end on May 15. Coindesk reported
“Pursuant to Rule 431 of the Rules of Practice,11 BZX’s petition for review of the Disapproval Order is granted. Further, the Commission hereby establishes that any party to the action or other person may file a written statement in support of or in opposition to the Disapproval Order on or before May 15, 2017.”
Under this rule, the regulator can choose to “affirm, reverse, modify, set aside or remand” the prior contested action as part of the review.
Back in March, the price of Bitcoin spiked to $1350 in anticipation of the ETF decision, before sharp decline to $891. Little has changed in the Bitcoin industry since the March, and it remains to be seen if the SEC will modify its stance. The full SEC order can be found here
Satoshi Nakamoto is Back
Craig Wright, who claims to be part of the team that was Satoshi Nakamoto, has stirred up an interesting spin to the bitcoin block size debate deadlock. Craig is now Chief scientist at nChain, a blockchain company that lays claim to a portfolio of blockchain patents. The firm was recently acquired by a high tech private equity fund SICAV plc, and hired Jon Matonis as Vice President of Corporate strategy as per bitcoin.com .
On his appointment, Jon tweeted
“Bitcoin now has a strong and effective counterbalance to Blockstream Corp (Montreal).”
Since then, Craig has been active on an anti-SegWit, pro-big blockers slack channel, where he continues to assert his technical prowess by suggesting alternatives to scaling bitcoin on chain. Whether he is Satoshi or not, it is worth paying attention to his technical discussions.
Bitcoin Weekly Price forecast
This week I am looking out for a top of the wave 5 count in purple. Anywhere between $2000 and $2300.
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