September 20, 2017

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Bitcoin Price Regains $4600, Market at Rest in Equilibrium



Following the ban of initial coin offerings in China, sentiment in cryptocurrency markets was dampened, sending BTC-USD as low as $4001.93 on the Bitstamp exchange on September 5. However, two days later and bitcoin’s price has already recovered to around $4635 at the time of writing. The cryptocurrency looks on course to post its sixth consecutive week of gains against the dollar.

Bitcoin is currently at rest in equilibrium, as indicated by the 4-hour chart below. The price action remains in the Ichimoku cloud, so we anticipated a breakout to either side.

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There is more weight for a bullish breakout, targeting the fractal resistance at $4979.90. We have several bullish signals from the chart. Momentum is becoming more bullish, as the Awesome Oscillator is moving higher and remains green in color.

Secondly, the lagging line (purple) is beginning to move above the previous price action, suggesting we should buy on a break of $4700. With a bullish breakout, we expect the market to drift toward the fractal resistance at $4979.90.

In the event of a 4-hour close below the Ichimoko cloud, we look to target the fractal support at $4356.42, which is also the support provided by the base line.

Also, the conversion line is moving higher and provides support at $4515.38, so we should look to place limit buy orders around this level. The conversion line is above the base line, supporting the bullish momentum signaled by the Awesome Oscillator.

The Ichimoku cloud is very thin for some of the 4-hour trading session ahead of us. For instance, notice that between Sep 7 20:00 to Sep 8 16:00 (UTC), we see that the cloud is relatively thin, indicating a weak resistance zone. Therefore, we expect a breakout (could be bullish or bearish) is more likely to occurr within this window. We could see BTC-USD continue to trade within the cloud until then and we want to wait for an Ichimoku breakout before making a decision on a long or short position.

Finally, the chart above shows that the fractal resistance at $4649.23 is being tested. A 4-hour close above this level should confirm the dominance of buyers and provide a good entry into a long position. Our long-term target remains as $6359.47, the 261.8 percent Fibonacci extension. The target is displayed by the weekly price action below.

BTC-USD could easily reach $6359.47 as we enter into December 2017. The chart below shows the ‘near consecutive’ record high count. Currently, we are on number five at $4979.90, as notice since the fractal support at $1830, we have had five higher highs since then. Also, the count restarted at this fractal support since we had three weeks without a fresh high above $2980.

A market is suggested to be exhausted once we have 10 near consecutive record highs, a method covered in Steve Nison’s Beyond Candlesticks: New Japanese Charting Techniques Revealed. Even this number is just a rule of thumb, as bitcoin has previously displayed 13 near consecutive record highs before on the weekly timeframe. But for argument sake, let’s go with ten.

The chart above shows the longest time needed for BTC-USD to display ten near consecutive record highs. The bullish run could last until early December 2017 and peak at/above $6349.23. Once this level is reached, we could see a pullback go as low as $3000, as suggested by the Ichimoku cloud, which provides support around this zone for March 2018. Alternatively, we also face an important support at $4270.80.

This week, the price action tested this Fibonacci support at $4270.80 and looked as if it was going to be broken. However, buyers have bid the price back above this level, confirming the bullish outlook is intact. We need a weekly close higher than $4270.80 for further confirmation and will give a higher likelihood of a drift toward $6359.47.



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