Bitcoin price continued rising during the past week to score a high of around $1139.89 on bitstamp last Wednesday. Just after the week’s high was recorded, a downwards price correction wave pulled price down to a low of $812, before rising again to $903 at the time of writing of this article.
So, the bullish wave, that has been fueling the price surge since last September, has been apparently reversed when price approached the all-time high ($1168.72) recorded in November, 2013. So, what can we expect during the upcoming week? Will price continue rising after this brief price correction attempt? or will the market’s bears take control and pull price down to even lower levels?
As I will be writing the weekly bitcoin analysis on Deepdotweb.com, I will set up throughout this article, key resistance and support levels that will help us better understand my bitcoin price analysis during the upcoming weeks.
Bitcoin Price Moving Above of the 1×1 Gann Angle On The 1 Day BTCUSD Chart:
To better visualize key resistance and support points at the current price levels, let’s examine the 1 day BTCUSD chart from Bitstamp, all the way down to the late months of 2013 (look at the below chart):
– Let’s draw Fibonacci retracements extending between the high scored on November 29, 2013 ($1168) and the low scored on January 10, 2015 ($147.66). Now, we can clearly see that the market’s bulls couldn’t keep price above $928.53 which corresponds to the 76.4% Fib retracement level. So, when price approached the all-time high ($1168.72), the bullish wave was reversed. If the downwards price correction wave continues on, we can see price drop to test the support level corresponding to the 61.8% Fibonacci retracement level ($779.94) during the upcoming week.
– Let’s plot uptrending Gann angles centered on the low scored on January 10, 2015 ($147.66). We can see that bitcoin price is now moving above the 1×1 Gann angle and has been so since October 16, 2016. The 1 day candlesticks have been converging away from the 1×1 Gann angle since last October, yet when the candlestick, representing the trading session of January 4, 2017 almost touched the 1×2 Gann angle, the bullish wave was reversed starting a downwards price correction wave.
– The MACD indicator was in the positive territory throughout the past week, yet on January 4, the negative red trend line, crossed above the positive blue trend line which signaled reversal of the uptrend (look at the part of the MACD curve marked by a blue ellipse on the above chart). So, we are likely to see price drop down so long as the MACD indicator exhibits this bearish sign. This can also be confirmed by plotting Bollinger’s bands; bitcoin price is now moving above, or tangential to, the upper Bollinger band which denotes market instability at this price level, so we are likely to see it drop during the upcoming week.
Bearish Signal Via Williams Alligator On The 1 Hour BTCUSD Chart:
By examining the 1 hour BTCUSD chart from Bitstamp and plotting the Williams Alligator (look at the below chart), we can observe the following:
– The smoothed moving averages (SMAs) of Williams Alligator exhibited a bullish alignment last Wednesday, as the blue line (jaw), representing the 13 period SMA, was beneath the red line (teeth), representing the 8 period SMA and both of them were moving below the green line (lips), representing the 5 period SMA. When the SMAs of Williams Alligator are aligned this way, the alligator is said to be “awakening and ready to eat”. This alignment signaled an upward price movement that took price up to score the week’s high of $1139.89
– After scoring the week’s high, a price correction attempt started after the SMAs of Williams Alligator exhibited a bearish alignment, as shown on the above chart with the green line (lips) below the red line (teeth) and both of them are beneath the blue line (jaw). The price correction wave stopped yesterday when a “bullish engulfing pattern” was formed on the 1 hour BTCUSD chart (look at the 2 candlesticks surrounded by the green ellipse on the below chart), which was also followed by disappearance of the bearish alignment of Williams Alligator SMAs.
According to our analysis, it is highly likely to see bitcoin price drop during the upcoming week as some traders close their long positions to collect their profits. Strong support can only be found around $779.94 which corresponds to the 61.8% Fib retracement, so it is not unlikely to see price drop near this key support level. Alternatively, as the price correction attempt seems to be losing momentum, we can see it continue rising to test the resistance level around $928.53 which corresponds to the 76.4% Fibonacci retracement level.